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
What to Glean From the IRS Hiring Binge for BV Experts
The IRS needs to hire 31 business valuation experts, and the job announcement provides an interesting perspective as to the valuation issues that are on the agency’s radar.
Bogdanski on Giustina: The Tax Court, Discounts, and DCF
“The Tax Court was stingy with discounts” in Estate of Giustina v. Commissioner, Professor Jack Bogdanski (Lewis and Clark Law School) told the audience in his fifth annual address on “Recent Developments in Federal Tax Valuations” held in Portland in Dec ...
Introducing the Rudich/Jaroudi BIZCOMPS DLOM Study
The authors do an analysis of the BIZOMPS database of sales of small private companies to uncover an imbedded discount for lack of marketability (DLOM) in a specific industry. The authors would like feedback on this study and methodology.
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 ...
A Good Example of a Powerful Visual for a Valuation Report
At the recent New York State Society of CPAs’ Business Valuation and Litigation Services Conference, Chris Mercer (Mercer Capital) gave a good example of an effective visual designed to convey a complex issue to a client or trier of fact.
Pre-IPO Studies Endure to Retain Foothold in the DLOM Toolbox
Pre-IPO studies have withstood criticisms and court challenges to remain a viable method for developing a discount for lack of marketability (DLOM). Over a third (38%) of valuation experts use them, according to a survey. The article includes an interview with Brian Pearson of Valuation Advisors, a provider of the largest pre-IPO study.
Red Flags Appear in BVR’s DLOM Survey Results
There are a number of areas of concern in the responses to BVR’s recent survey on methodology and practice for estimating a discount for lack of marketability (DLOM).
Experts Size Up Controversial IRS Estate Valuation Regs
Valuation experts were anxiously awaiting the proposed IRC Section 2704 regulations designed to crack down on estate valuation discounts. Now that they have been released, they have triggered strong reactions from the valuation community, the legal profes ...
Recent Developments Trigger a Fresh Look at DLOM
In the field of business valuation, there is no consensus as to an overall approach in reaching a conclusion as to a discount for lack of marketability (DLOM). Practitioners focus on a lot of individual procedures, and there is debate over these methods.
BV News At-a-Glance
A monthly roundup of key developments from the standard setters, regulators, and valuation professional organizations (VPOs), plus noteworthy new books, research papers, and studies of interest to business valuation experts.
Updated Data in Largest Pre-IPO Study Reveal High Discounts
New pre-IPO data for the first quarter of 2021 has been added to the Valuation Advisors Lack of Marketability Discount Study, which is the largest study of its kind. The use of pre-IPO data is a widely used and accepted method for estimating a discount for lack of marketability (DLOM).
Seven Cases to Read Before Writing Your Next Valuation Report
“Valuation report writing is a lot more challenging than we think,” says former IRS official Howard Lewis (International Society of Business Analysts and RiskGuidance Co. LLC). Speaking at the recent NYSSCPA Business Valuation Conference in New York City ...
Rebutting Critics of the Longstaff DLOM Methodology
In 1995, when Francis A. Longstaff, Ph.D., presented his idea that the formula for calculating the value of a lookback option with and without a liquidity restriction assumption could be used to estimate the discount for lack of marketability (DLOM) of a ...
Is the Lingering Criticism of Using Pre-IPO Studies for DLOM Justified?
The use of pre-IPO studies to measure a discount for lack of marketability has gained acceptance among valuation analysts and the Tax Court even though the method continues to be a target of some criticism. Of course, criticism can be made of all data tha ...
Why NAV May Not Be The Best Method for Valuing Multi-Tiered Entities
Despite the recommendations of Revenue Ruling 59-60 §5(b), the net asset value (NAV) method may not be the correct approach for valuing a many-tiered asset-holding company, based on theoretical as well as practical grounds, including the “bottom-up”
BVResearch Pro Tackles Tricky Search for Guidance on a 50% Interest
During a webinar, an appraiser challenges BVR’s BVResearchPro platform to find court cases, articles, or any other material that discusses a marketability discount for a 50% ownership interest in a private company.
Tips for Valuing—and Designing—Buy-in and Buyout Agreements for Medical/Dental Practices
After hundreds of engagements, the author identifies a number of best practices for both the valuation analyst and the consultant with respect to buy-in/buyout arrangements.
Perfect Storm: COVID-19 and 2020 Election—Unexpected Windfall for E&G Tax Planning
Insights into the impacts on the estate and gift tax area and the opportunities it presents for business valuers.
Heat Maps for Valuing Venture-Backed vs. Closely Held Firms
During a recent BVR webinar, Joe Orlando (Exit Strategies Group) and Eric Sundheim (Mercovus Valuations) presented some heat map charts that illustrate the differences between the due diligence, tools, and approaches to valuing a venture-backed firm versus a closely held company.
Surviving a divorce engagement
This article offers a highly condensed primer for divorce engagements. It will be useful both to those approaching such engagements for the first time and also as a review for experienced practitioner ...
Cultures and Continents Clash in High-Stakes Divorce Valuation
Valuation experts who find themselves involved in a divorce engagement with globe-trotting spouses can glean some valuable insights from a recent United Kingdom case. The judge in the English Family Court found herself bemused by wholly different approac ...
Can the BV Profession Agree on Common Practice in These Challenging Areas?
Less than a quarter of a century has elapsed since some of the most essential business valuation concepts were first documented, Chris Mercer (Mercer Capital founder and chair) explained at a keynote session at the recent AICPA Forensic & Valuation Servic ...
Book Review: Working With the IRS—A New Book in the Arsenal
How to Work With the IRS is an important contribution to any practitioner’s valuation library. Written by Michael Gregory, a 28-year veteran of the IRS, the book is based on both extensive technical expertise and first-hand experience; throughout the book ...
A view from the Tax Court bench: What judges want in expert reports and testimony
From my perspective, anyone approaching the subject of valuation should be aware of certain truisms as a frame of reference. They are: Each valuation case is unique. Although guidance can be ob ...
FLP Appraisals: Plan for the New ‘Matrix’
Recent court decisions have dealt a blow to the effectiveness of family limited partnerships (FLPs) for transfer tax purposes, particularly when the partnership formation and funding fail to respect state law requirements. In these cases, the IRS has succ ...