Business Valuation Update
- How to Review a Report’s Valuation Methodology
- Ideas for Solving Two Problems in the BV Profession
- How Do Your Firm’s Benefits Stack Up?
- Using Rule of Thumb Data to Uncover Cooked Books
BV News and Trends April 2022
A monthly roundup of key developments of interest to business valuation experts.
Hotel Valuation: Breaking the Rules—But Getting it Right!
This article explains why the dominant method for the appraisal of hotels is contrary to the main methods used for the appraisal of other real estate-centered enterprises (RECEs) and is therefore flawed. Furthermore, this method does not mimic the way hot ...
Debt Service Analysis Provides Reality Check in Medical Practice Valuations
Editor’s note: This article is excerpted from the BVR/AHLA Guide to Healthcare Valuation, 3rd ed. Reality checks are most important in valuation for transactional purposes and in those jurisdictions where fair market value is the standard for marital dis ...
Four Potential Problems When Calculating the S Corp Benefit
Many articles have been written and several models developed in an attempt to properly capture the benefits of being a Sub S—including the method utilized in the Delaware MRI case. There also have been recent discussions questioning the validity of the Su ...
Market Multiple Adjustments: Get a Grip on GRP
A follow-up of an earlier article that focuses on the attributes of growth, risk, and profitability (GRP) in a benchmark analysis of guideline companies.
9 Ways to Improve Your BV Report Writing
I started doing business valuations in the mid-1980s. Since that time, I have prepared and reviewed more valuation reports than many practitioners and fewer than some others. Still, my experience to date has allowed me to identify, and admire, a well-craf ...
A Quantitative Model Evolves for Determining Passive Appreciation
A vexing problem for business valuators is determining the allocation between active and passive appreciation of a closely held business caught up in divorce. Due to societal and demographic trends, this is an issue of growing concern. Also, the courts ar ...
Global BVU News and Trends June 2018
Business valuation news from a global perspective.
Some Key Takeaways From the AICPA FVS Conference
Over 1,100 attendees converged on Las Vegas for the AICPA Forensic and Valuation Services Conference 2015. BVU was there and heard some outstanding speakers and topics. Covered below are just a few of the takeaways. Future issues will cover these—and more.
Control Premiums: Application and Analysis
Most valuation specialists would agree that the selection of a control premium requires significant “appraiser’s judgment.” This would be true whether valuing a controlling interest or calculating the inverse of a control premium to value a noncontrollin ...
Valuing Shareholder Loans in Divorce: What Is It Worth?
After a shareholder loan has been deemed to be a bona fide debt of the company, payable to the shareholder, the valuation analyst has yet another task: determining the fair market value of that debt.
Indefinite Is Not Infinite —Solving a Dichotomy in Trademark Valuation
The valuation of an intangible asset is based on its useful life. For trademarks, appraisers regularly opt for an indefinite life, when no obvious factors exist that would limit the future economic life of the trademark. However, almost all brands are fin ...
Changes in Regs and Standards Take Center Stage at ASA Fair Value Event
A slew of new and proposed changes to government standards, accounting rules, and valuation profession matters took the spotlight at the 11th Annual Fair Value Conference in Los Angeles. The American Society of Appraisers and the University of Southern Ca ...
A Timely New Study of Bankruptcy Prediction Models from Morningstar
In light of the current economic turmoil and continuing uncertainty in credit markets, it s even more important that business appraisers accurately identify distressed companies and their potential for default. Developing cost of capital (discount) rates in this economic environment presents an additional challenge. Recently, Morningstar s valuation research team reexamined two bankruptcy prediction models the Z Score and Distance to Default models and assessed their predictive power. We also studied a simple, single-variable model based on the ratio ...
BV News and Trends September 2021
A monthly roundup of key developments of interest to business valuation experts.
BV News and Trends April 2024
A monthly roundup of key developments of interest to business valuation experts.
25 Tips on Dealing With COVID-19 From the NACVA Conference
COVID-19 was a hot topic of discussion in a number of the sessions at the NACVA and the CTI’s 2020 Business Valuation and Financial Litigation Super Conference, which was held online over five full days (June 15-19).
Using a Discounted Cash Flow Methodology in Uncertain Times
A fundamental look at the method taking center stage during the pandemic. This article outlines how the DCF method works and to highlight the nuances and trap doors that will be encountered and must be overcome to reliably apply the method to derive an indication of value that is well reasoned and supportable for the application intended.
ISO 10668 and Brand Valuations: A Summary for Appraisers
In 2010, a major proprietary brand valuation service, BrandZ, ranked Google’s brand number one in the world, with a value of $114 billion. Interbrand, another highly respected brand valuation organization, put it only in fourth place, with a meager $44 bi ...
How New QBI Deduction Impacts the Hypothetical Buyer and Seller, Part 2
Part 2 of a two-part article on the impact of the new tax law’s Qualified Business Income (QBI) deduction for pass-through entities in determining estimated after-tax cash flow at the investor level, as well as the related change in the fair market value of the entity.
Do put rights affect the discounting of charitable donations?
A subscriber recently asked if we’ve seen any case law on charitable contributions with put rights—i.e., when a donor gives a stock interest in a company as a charitable donation along with a put right to sell the stock back to the company. BVU asked Chri ...
Adjustment Mapping and the Public-vs.-Private-Company Discount Debate
Editor’s note: This article advances the discussion in the article “Private Company Discounts Are Not Caused by Lack of Marketability” that Gilbert Matthews wrote for the June 2016 issue of Business Valuation Update. The author of this article joins the c ...
Economic Obsolescence: Determining Loss of Value Caused by External Factors
(Editor’s note: Economic obsolescence is a topic that deserves more attention than it has been given. While the phenomenon arises regularly, it is often overlooked in a valuation analysis. Also, there is scant information on it in the main business valuat ...
A Method for Quantifying Contract Renewal Risk in Valuations
A formula that explicitly incorporates the assumed probability of renewal in the valuation of businesses that depend on contracts, licenses, or permits for their future cash flows; it builds on the Gordon growth model and the formula for the future value of a growing annuity.
There is a ‘New’ Beta in Town and it’s Not Called Total Beta for Nothing!
When presenting the Butler Pinkerton Model™ (BPM) at various conferences across the country, we often ask audience members to define beta. Typically, a brave attendee responds that beta, “Measures the volatility of the stock relative to the volatility of ...