Highlights of the 15 December issue:
  • PwC opines on the value of distressed assets in going-concern sales under the new Corporate Insolvency and Governance Act 2020
  • High Court orders London Court of International Arbitration to correct damages calculation error
  • Time to look back at the core professional values required for valuation
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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.

FRC continue to challenge auditors to confront management on valuation of financial instruments and other judgements

The executive director of supervision at the Financial Reporting Council (FRC) (David Rule) completed a year-end review of the audit quality reviews conducted from 2018 to 2020 and found that the culture and methodology of audit, primarily at the Big Four firms, had improved measurably.

Plimsoll UK promotes the value of annual business valuations

Relatively few UK business owners understand what a business valuation does—and how they could benefit from the process.

RICS consider adoption of expanded business valuation glossary

RICS have been in the news the last few weeks regarding the termination of directors and whistleblowing activities—but they’ve also released a draft of a revised international glossary of business valuation terms.

IVSC Financial Instruments Board release IVS 500 Exposure Draft for comments by 19 April

In December 2018, the IVSC constituted a new Financial Instruments Board, tasked with reviewing and improving IVS 500: Financial Instruments.

Deloitte releases surprisingly optimistic survey of UK CFOs

Deloitte’s latest CFO survey for Q4 2020 should provide an emotional lift for all business leaders and valuers—even though the survey was conducted the week before the new COVID-19 restrictions were announced on 19 December and the Brexit deal on 24 December.

Dates for your diary

ICAEW Advanced Valuation Techniques,17-18 February or 14-15 June, virtual classroom taught live by Steve Shaw ...

Dates for your diary

17 December: Transfer Pricing: 2020 Year-End Considerations, a Lexology webinar with Mark Alms, Alvarez & Marsal, 14:00 BT ...

Time to look back at the core professional values required for valuation

RICS is examining the values required to meet professionalism standards and has released ‘Time to Reinforce Our Core Values,’ an opinion piece by Michael Zuriff, head of regulation, Americas, for the Royal Institution of Chartered Surveyors (RICS).

High Court orders London Court of International Arbitration to correct damages calculation error

A Russian supply-chain business owner was awarded US$58 million in damages—until the English High Court and judge Sir Ross Cranston reviewed the maths.

PwC opines on the value of distressed assets in going-concern sales under the new Corporate Insolvency and Governance Act 2020

Inactive markets, short time scales, cash-flow constraints, and potential damage due to public knowledge of financial distress may all have increased impact on ‘going concern’ valuations.

The goodwill comment period is extended for one last time, to 31 December

This discussion began in earnest in 2015 as part of the discussion paper ‘Business Combinations—Disclosures, Goodwill and Impairment,’ and the current question about the treatment of goodwill has been the subject of extensive discussion by ICAEW, IVSC, and international groups.

Dates for your diary

1 December (today): The Absence of a Size Effect: Letting Go of the Size Premium Featuring: Clifford Ang (Compass Lexecon) 18:00 BT ...

Global intangible asset value rebounds to hit all-time high

Business valuers recognise that intangibles present individual ‘facts and circumstances’ challenges. And IFRS 3, even without the proposed amortisation changes, does not fully report the current value of acquired or created intangibles (increasing the operational value of intangibles is generally a strategic goal).

Concerned about a specific business valuation issue? The IVSC wants to know.

The International Valuation Standards Council’s (IVSC) Agenda Consultation to solicit input to help set the agenda for the future development of the International Valuation Standards (IVS) is open for another six weeks.

DealStats 3Q20 small private-company EBITDA multiples rise

After stalled M&A, lockdowns, and a pandemic, it’s easy to forget that small enterprise value was declining through most of 2019.

Does COVID-19 alter the Companies Act, or the value of minority shares?

All business valuers accept the fact that minority shares hold discounted value.

Dates for your diary

1 Dec: ICAEW Practical Business Valuation, virtual, four-day course ...

It’s easy. Retain 90% of your customers, grow 50%, and your business valuation client will be worth 10X

Here’s a quote on the current 4Q state of the UK private equity marketplace that explains the disparity in valuation expectations held by investors, owners, financial analysts, and those concerned about closely held businesses.

BVR enhances implied minority discount offers with FactSet Mergerstat control premium upgrade

The value of control has been trending lower in the UK. Current overall data from the FactSet Mergerstat/BVR Control Premium Study of over 1,300 UK companies show a median increased value of controlling interest shares of only 20.7% (this converts to a median implied minority shareholder discount of about 17%).

How flawed is the risk-free rate for current valuations?

When valuers are expected to supply a DCF analysis (an increasingly frequent need), most start with the risk assumption of a market premium compared to government bonds.

English High Court holds that a legal professional’s sharp acts can’t be shielded from damages under the ‘iniquity exception’

A family dispute regarding the value of control has occupied the courts for eight years, but one portion of it has achieved resolution in Barrowfen Properties v Girish Dahyanhai Patel & Ors.

The value of internally generated intangibles depends on where they were created

‘Against a backdrop of the growing importance of intangibles, for regulators and legislators there is clearly scope for improving comparability between European company accounts by increasing the harmonization of the treatment of intangibles by SMEs,’ a new survey issued by the European Federation of Accountants and Auditors for SMEs reveals.

Dates for your diary

30 October: ICAEW Excel Modelling—Investment Appraisal, Valuation and Business Cases, virtual, 9:15-12:30 BST (repeated live 4 December ...

Matrimonial decisions continue to introduce valuation concepts beyond ‘fair value’

‘We can see that the family court are moving further and further away from conventional valuation standards,’ says Luke Morris, the Scrutton Bland partner.

Which business characteristic guarantees a premium value?

Business valuation experts in the UK often find little benefit from the academic literature about portfolio and investment theory.

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