Highlights of the 17 May issue:
  • Why isn’t business valuation more fully recognised as a profession?
  • Does your client use stock-based compensation? Beware when choosing an effective tax rate
  • U.S-based TAF exposure draft addresses conclusion of value vs. value calculations
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Follow the business valuation profession in the United Kingdom and its expanding role in regulatory, fiscal, contentious, and compliance valuations with BVWire–UK. Twice a month, BVWIre–UK delivers news and perspectives from valuation thought leaders, expert practitioners, academics, the High Courts, HMRC, the standard setters, and more. We’ll also keep you current on new business valuation research, methodologies, data tools, and training opportunities from ICAEW, RICS, BVR, and others. Contact us with news items and/or suggestions.

Why isn’t business valuation more fully recognised as a profession?

The business valuation profession in the UK has evolved rapidly, though much of that has been the result of IASB and other regulatory change, mostly affecting the practices of the large audit firms.

Does your client use stock-based compensation? Beware when choosing an effective tax rate

IFRS require a reconciliation between the corporate tax rates HMRC requires and the effective tax rates.

U.S-based TAF exposure draft addresses conclusion of value vs. value calculations

The Appraisal Foundation (TAF) is the leading US-based valuation standards organisation.

The UK set a new record of 4,900 insolvencies filed in the first quarter of 2022

As anticipated, the end of emergency government COVID-19 support schemes caused company insolvencies in England and Wales to rise to their highest (since 2012) level in the first quarter of 2022.

A new generation of financial experts have never done valuation analysis during inflation, Damodaran says

First, the good news: Aswath Damodaran notes that April was the first month since our current inflationary cycle when overall inflation slowed.

KPMG Law add to their UK lawyer headcount

The firm announced plans to add over 200 new lawyers in London by 2024, more than doubling its total UK legal staff.

Dates for your diary

24 May: 3rd Annual European Valuation Conference, Prague ...

OECD Transfer Pricing Guidelines still dominate HMRC valuation policies

Valuers should continue to assume that HMRC expect a well-supported comparable uncontrolled price (CUP) analysis, say Macfarlanes in a new analysis of current transfer pricing practise and revenue compliance.

HM Courts & Tribunals report a 50% increase in new divorce applications

As discussed in previous issues of BVWire—UK, business valuation experts who do divorce work can anticipate increased inquiries.

Kroll reports continued low eurozone risk-free rates, while US rates rise

Kroll continue to update UK cost of capital data at their Cost of Capital Resource Center.

May and June are great months for UK business valuation training

Business valuers will have their first opportunity to attend the ASA’s European Valuation Conference in Prague on 24 May, headlining a great calendar of webcasts and live events.

Dates for your diary

24 May: 3rd Annual European Valuation Conference, Prague ...

Deal volume slowed down last month, but big transactions continue

The April issue of the FactSet Mergerstat Monthly Review is now available.

Change in leadership at IVSC Financial Instruments Board

KPMG Canada partner Thomas Lee will take over as chair of the Financial Instruments Board of the International Valuation Standards Council (IVSC), taking the reins from Gavin Francis (HSBC Holdings PLC), who steps down after three years in the role.

6 April marked the start of no-fault divorce (and business valuations) in the UK

Divorces filed prior to 31 March remain subject to the Matrimonial Causes Act of 1973, but, as highlighted in BVWire—UK previously, as of 6 April, the Divorce, Dissolution and Separation Act 2020 went into effect.

A new free model helps business valuers expand their DCF analyses

“DCF is much more than simply an explicit forecast plus terminal value,” argue the authors at The Footnotes Analyst in their most recent article.

Houlihan Lokey updates its PPA study

Analysts at Houlihan Lokey have released their 2019 and 2020 Purchase Price Allocation Study, which examines key data points of purchase price allocations (PPAs) recorded by U.S. public registrants.

Dates for your diary

27-28 April: RICS UK Valuation Conference 2022, virtual ...

Can you apply the market approach when valuing crypto?

“Factors impacting the price of a digital asset include supply and demand, number of competing digital assets, cost to produce the asset through mining, rewards issued to miners for verifying transactions to the blockchain, regulations governing sale and use, internal government, and news,” say the authors of a new paper, “Digital Asset Valuation.”

Now’s the time to preorder the 2022 Mergerstat Review

The annual Mergerstat Review delivers comprehensive rosters, data, and statistics on global merger and acquisition (M&A) transactions including all the top UK deals.

Expenses for share options to UK employees can be tax deducted, despite HMRC objections

In Commissioners for Her Majesty’s Revenue and Customs v NCL Investments Ltd and another EWCA Civ 663, the UK Supreme Court ruled last month that future cash-flow projections can continue to include the tax benefits of restricted stock expenses, as is the current practice for most UK business valuations.

Can you risk using ESG data in your UK valuation reports?

“The IVSC’s new ESG Working Group feels that it is important to carry out a survey of investors, firms, and valuers to understand where they are on their journey in relation to the quantification of ESG components within their valuations. Within valuation, no explicit standards exist,” says Alex Aronsohn, IVSC technical standards director (tangible assets).

Just when you assumed overpricing couldn’t increase, PE ups the ante, Dechert partners argue

Dechert is involved in many of the largest UK deals, so it’s worth listening when four of their leading finance partners (Jonathan Angell, John Markland, Daniel Hawthorne, and Thiha Tun) comment on a new trend.

New claims processing requirements for R&D tax reliefs could impact future value

The HM Treasury outlined new provisions of the United Kingdom’s research and development (R&D) tax relief system in their December 2021 report, with emphasis on providing more tax incentives for investments and innovation undertaken in the United Kingdom.

Valuation independence: plan early to avoid advocacy

This is one of the tips in an article from the latest journal of the Chartered Business Valuators Institute (CBV Institute), Canada’s valuation professional organisation (VPO) and standard-setter.

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