BVWire Australia Issue #9-2 | 15 April 2015

 

KPMG to launch its Business Valuation Practices Survey

KPMG is set to release its second Business Valuation Practices Survey, which provides insight into the parameters and approaches currently followed in the business valuation profession.

The survey has canvassed responses from a wide range of professionals and, for the first time, the survey also covers tangible asset valuations and real estate valuations.

Some of the areas covered in the survey were:

  • The most pressing business valuation challenge of 2014;
  • Trends for valuation deals;
  • Asset class patterns;
  • S&P/ASX200 index movements;
  • Thoughts on infrastructure assets;
  • Most common valuation complaints;
  • Sale and leasing activity patterns; and
  • Real estate returns.

The current issue of Business Valuation Australia covers the survey in detail. Subscribe now. BVWire—Australia will report on the complete findings as they come to hand.

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Movements in the local BV industry

Change is a constant in the BV arena. To keep you abreast of movement in the industry, BVWire—Australia reports on important appointments and changeovers as we learn of them.

Danie van Aswegen, partner of corporate finance at KPMG, will soon move on to Value Adviser Associates, a leading valuation practice specialising in a range of offerings servicing international, ASX-listed, and high-profile corporate and government clients.

David Pearson, valuation director at Deloitte Corporate Finance for 10 years from September 2005 to September 2014, has since moved to Leadenhall Corporate Advisory and assumed the position of its valuation director. Pearson is a valuation expert in independent expert reports (IERs), commercial advice, taxation, and financial and fund reporting and has experience across a range of sectors including financial services, infrastructure, and real estate.

Celeste Oakley has moved from independent corporate advisory group Grant Samuel to KPMG’s corporate finance team.

When you hear about important movements in the local BV industry, please email sonian@bvresources.com.

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Must an expert witness be a human?

How far can you take corporate personhood? This was a question the Delaware Court of Chancery in the US recently addressed in the Dole shareholder litigation. The precise issue was whether Dole could designate its financial advisory firm, as opposed to the human being(s) who wrote the expert report, as its valuation expert.

Backstory: In late 2013, the defendant, Dole Food Co. (Dole), effected a take-private merger. Subsequently, the plaintiffs, two investment firms that appeared to pursue an “appraisal arbitrage” strategy, challenged the transaction in the Delaware Court of Chancery, claiming breach of fiduciary duty and petitioning for statutory appraisal.

Dole named Stifel, Nicolaus & Co. (Stifel), an investment banking firm, as its expert witness on the subject of the company’s value at the time of the transaction. The opening and rebuttal reports identified the entity as its author, but two “biological persons” signed them as authorized representatives of the firm. Neither individual signed in his personal capacity.

For purposes of deposition, Stifel produced the managing director as the person who was most knowledgeable about the reports. When he claimed authorship, Dole’s counsel objected that “he is not the expert” but that Stifel was the expert. The plaintiffs contended that an expert witness must be a biological person.

A firm has no mind: Even though the specific Delaware Code includes provisions that “appropriately personif[y]” corporations, companies, and firms in certain commercial and economic contexts, “the Rules of Evidence make clear that a witness must be a biological person,” the court said.

A corporation is an artificial being that only exists “in the contemplation of the law.” It has no mind with which to think and no voice with which to speak. This meant that Stifel could not testify at trial. However, to avoid leaving Dole without an expert, the court allowed the managing director to substitute in and testify to the contents of the expert reports, as long as he confirmed that he had adopted Stifel’s expert reports.

Takeaway: A corporation can do and be many things, but it cannot serve as an expert witness.

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Stephen Reid joins the BVA advisory board

Stephen Reid is the latest business valuation expert to join our BVA Advisory Board. Welcome, Stephen!

Stephen is a partner at Deloitte, with over 25 years of corporate finance experience, particularly in the valuation of shares, businesses, and intangible assets. He leads Deloitte’s national valuations team of 50 professionals.

Stephen focuses on major valuation projects including advice on mergers and acquisitions, IERs, and valuation advisory projects for other commercial purposes.

During his career, Stephen has provided clients with corporate finance advice, preacquisition due diligence reviews, valuations, structuring advice, and feasibility studies in respect of companies operating across a broad range of industries throughout Asia.

Stephen is interested in the rapidly evolving energy and resources sector, especially the challenges facing the resources sector as well as supply and demand pressures in the eastern Australia energy markets.

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BVR releases two new guides

The latest news in the business valuation profession and complete coverage of court decisions are provided in two new guides from Business Valuation Resources (BVR), BVA’s American counterpart, from which parallels can be drawn with the Australian BV industry.

  • The Business Valuation Update Yearbook 2015 covers the most innovative approaches and techniques, leading conferences, new court decisions, and changes in regulations and standards in the profession with on-the-ground reporting from valuation experts, thought leaders, and the BVR editorial team.
  • The BVR Legal and Court Case Yearbook 2015 is a collection of critical valuation-related court decisions involving marital disputes, breach of contract actions, damages, dissenting shareholder disputes, estate and gift tax cases, federal taxation, intellectual property cases, bankruptcy litigation, and more. It also contains a case listing by state/jurisdiction, court, and case name, followed by a short description of the key valuation issue of each case.

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We welcome your feedback and comments. Contact the editor, Sonia Nair, at editorau@bvresources.com.
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In this issue:

KPMG BV survey

BV movers

Nonhuman expert witness

BVA advisory board addition

Two new BV guides


 

 

 

 

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