Business Valuation Update

March 2002

Vol. 8 No. 3

Table of Contents

Editor's Column

• Should subsequent events be considered in the present value of a business entity? (Shannon P. Pratt, CFA, ARM, ABAR, FASA, MCBA, CM&AA)

Featured Articles

• CapX = depreciation is unrealistic assumption for most terminal values; Frequent error causes overvaluation (Gilbert E. Matthews, MBA, CFA)

Legal and Court Case Update

• Tax Court Rejects Use of Single 'Similar' Comparable
• Tax Court Decision Remanded to Explain Basis for 4% Discount Rate
• Startup Businesses Can Prove Lost Profits Without Actual Record of Past Earnings
• Low-End Revenue Multiplier Accounts for Corporate Debts
• Jury Verdict Supported by Valuation Evidence
• Growth rate of 4% conservative for expanding business
• Confusion Over Interest Valued Leads to Remand

Data and Publications Update

• Valuing a small business requires a different approach
• Three market approaches to determine the blockage discount
• The increase in jointly retained valuation experts
• The case against tax-affecting S Corp. earnings in a divorce
• Section 2032A reduces estate tax
• Other business valuation books in 2001
• Other Articles March 2002
• New, incisive insights on valuations for divorce
• New trends in accounting firm valuations
• New resource for construction company valuations
• Guide to report writing
• Different valuations in different rounds of venture capital financing
• Approaches to valuing future damages

Cost of Capital

• Cost of Capital - 3/1/2002

Reader and Editor Exchange

• Pre- or after-tax
• Specific company risk factor
• Tax-affecting S corp earnings
• Dr. Bajaj responds to Dr. Pratts February 2002 Editorial: Bajaj attacks restricted stock and pre-IPO discount studies; Pratt replies, defending studies, notes that debate may be semantic
• Control versus minority
• How long to keep records?