The BVR Guide to Management Projections and Business Valuation: Analysis and Case Law

June 2021 Hardcover, PDF

BVR (editor)

Business Valuation Resources, LLC

Projections and forecasts are a vital element of business valuations and lost profits analyses. Projections are utilized by valuation professionals in a variety of settings, yet there are no “bright line” rules practitioners can lean on to validate their projections. Thus, we are left to scrutiny by adverse parties and the courts. 

BVR’s Guide to Management Projections and Business Valuation: Analysis and Case Law provides professionals with guidance in two forms. The Guide includes articles that discuss a variety of elements, issues, and techniques practitioners should consider when utilizing management’s projections or creating their own. In addition, the Guide includes a multitude of applicable case law  to assist practitioners in researching opinions on different matters in various jurisdictions.

This publication and many more are also available for download with a subscription to the Digital Library or BVResearch Pro.
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The Guide articles discuss a variety of factors practitioners could consider in performing their analysis as well as the types of methods and techniques applicable to specific services.  They cover:

  • The impact of COVID-19;
  • Explanation of projections and forecasts;
  • Flaws identified by the court in practitioner projections;
  • The application of forensic techniques to validate or scrutinize projections; and
  • The interplay between projections and discount rates.

Valuations that utilize a discounted cash flow (DCF) method rely on the accuracy of the forward-looking period projections. This component causes angst for many professionals in “predicting” future cash flows. However, along with the articles provided in this Guide a multitude of applicable case law is provided to assist practitioners in researching opinions on different matters in various jurisdictions.   It is important to learn what courts have said regarding their stance on practitioners’ assumptions utilized in projections and what has been found unacceptable. 

The Guide contains close to 100 digests of court decisions that involve projections and forecasts. These digests contain in-depth analysis of the valuation issues in the cases and are written by the BVR legal team. Plus, there is a handy summary table of cases (by category and jurisdiction) that gives you the case name, date, specific court, and the main valuation issue in the case. From the table, you can quickly refer to the case digest for an analysis and other details, such as the names of the judge and valuation experts involved (when known). You can also access the full court opinions from BVR’s BVLaw database.

Users of this Guide will learn valuable lessons to improve their projection analysis as well as methods to improve their confidence levels.  Our hope is that practitioners will prepare more logical and supportable projections, thus improving the quality of their work product and enhancing the profession’s credibility.

Table of Contents



PART I. Latest Insights

Chapter 1. Management Projections: Business Valuation’s ‘Dirty Little Secret’

Chapter 2. When Is a ‘Projection’ a Forecast?
By Rod P. Burkert, CPA/ABV, CVA

Chapter 3. The Valuation Paradigm of COVID-19: Using the DCF Method After an Economic Crisis
By Craig Jacobson, Dan Korczyk, and Richard Peil (B. Riley Advisory Services)

Chapter 4. Amid Market Data Volatility, the Best Option Is a More Rigorous DCF

Chapter 5. Flaws in North Carolina Court’s Appraisal of Reynolds American
By Gilbert E. Matthews, CFA, Sutter Securities, Inc. (San Francisco, Calif., USA)

Chapter 6. The Use of Financial Projections in Solvency Opinions
By Craig Jacobson, B. Riley Advisory Services (New York, N.Y., USA)

Chapter 7. Valuation and Forensics: Economic Benefit Streams
By Darrell D. Dorrell, CPA/ABV, MBA, ASA, CVA, CMA, DABFA, and Gregory A. Gadawski, CPA/ABV, CVA, CFE

Chapter 8. The Most Prevalent Projection Issues Raised in ESOP Litigation

Chapter 9. Valuation Guidance Related to Prospective Financial Information (PFI)

Chapter 10. Deviations From Historical Cash Flow and Their Implications to Effective Discount Rates for Lost Profits Analyses
By Josh Shilts, CPA/ABV/CFF/CGMA, CFE, and Jeff Robison, Shilts CPA, PLC (Jacksonville, Florida, USA)

PART II. Court Case Digests

Court Case Summary Table

Court Case Digests

Acosta v. Reliance Trust Co.

Acosta v. Wilmington Trust, N.A. (I) (Graphite)

Acosta v. Wilmington Trust, N.A. (II) (Graphite)

Acosta v. Wilmington Trust, N.A. (HCMC)

ACP Master, Ltd. v. Sprint Corp.

Adelphia Recovery Trust v. FPL Group, Inc. (In re Adelphia Corp.)

Albert Trostel & Sons Co. v. Notz

American Classic Voyages Co. v. JP Morgan Chase Bank (I)

Andaloro v. PFPC Worldwide, Inc.

In re AOL Inc.

Blueblade Capital Opportunities LLC v. Norcraft Cos.

In re Body Transit

Brundle v. Wilmington Trust N.A. (I)

Brundle v. Wilmington Trust N.A. (II)

Brundle v. Wilmington Trust N.A. (III)

Bruno v. Bozzuto’s, Inc.

Burtch v. Opus, LLC (In re Opus East, LLC) (I)

Cargotec Corp. v. Logan Industries

Cede & Co., Inc. v. MedPointe Healthcare, Inc.

Charron v. Sallyport Global Holdings, Inc.

Chesemore v. Alliance Holdings, Inc. (I)

Chesemore v. Alliance Holdings, Inc. (II)

Christopher v. Hanson

City of Hialeah Emples. Ret. Sys. v. FEI Co.

Crescent/Mach I Partnership v. Turner

In re Appraisal of Dell Inc.

Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd. (II)

In re DFC Global Corp.

DFC Global Corp. v. Muirfield Value Partners, L.P. (II)

Doft & Co. v. Inc.

In re Dole Food Co. (Dole III)

In re EM Lodgings, LLC

In re Emerging Communications, Inc. Shareholders Litigation

Finkelstein v. Liberty Digital, Inc.

Fish v. GreatBanc Trust Co.

Fox v. CDx Holdings

Gallagher v. Commissioner (I)

Gearreald v. Just Care Inc.

Gholl v. eMachines, Inc.

In re Global Technovations, Inc. (I)

Gray v. Cytokine Pharmasciences, Inc.

In re Greater Southeast Community Hospital Corp. (II)

Henke v. Trilithic, Inc.

Highfields Capital, Ltd. v. AXA Financial, Inc.

Huff Fund Investment Partnership v. CKx, Inc. (I)

IceMOS Tech. Corp. v. Omron Corp.

Insignia Systems, Inc. v. News America Marketing In-Store, Inc.

In re ISN Software Corp. Appraisal Litig.

Kendall Hoyd & Silver v. Trussway Holdings

In re Kinser Group LLC

Kohler et al. v. Commissioner of Internal Revenue

Kruse v. Synapse Wireless, Inc.

Lightbox Ventures, LLC v. 3 RD Home Ltd.

MacDermid Printing Solutions, Inc. v Cortron Corp.

Magarik v Kraus

Maric Capital Master Fund, Ltd. v. Plato Learning, Inc.

In re Mercury Companies, Inc. (I)

In re Merge Healthcare Inc. Stockholders Litigation

Merion Capital L.P. v. Lender Processing Servs.

Merion Capital LP & Merion Capital II LP v. BMC Software

Merion Capital, L.P. v. 3M Cogent, Inc.

Michael F. Taylor v. American Specialty Retailing Group, Inc.

MY Imagination v. M.Z. Berger & Co. (I)

Natural Balance Pet Foods, Inc. v. Chenango Pet Foods, Inc.

In re Nellson Nutraceutical (II)

Official Committee of Unsecured Creditors v. Calpers Corp. Partners, LLC

Parlour Enterprises Inc. v. The Kirin Group, Inc.

Perez v. Bruister (I)

Perez v. Bruister (II)

Perez v. First Bankers Trust Services, Inc.

In re PetSmart, Inc.

Pike v. Tex. EMC Mgmt., LLC

In re PLX Tech. Stockholders Litig.

Reynolds American Inc. v. Third Motion Equities Master Fund Ltd.

S. Muoio & Co., LLC v. Hallmark Entertainment Investments

Scalia v. Reliance Trust Co.

Smith v. Promontory Financial Group, LLC

In re Appraisal Solera Holdings, Inc.

In re Spansion

Structural Polymer Group, Ltd. v. Zoltek Corporation

In re Sunbelt Beverage Corp. Shareholder Litigation

In re Appraisal of SWS Group, Inc.

In re Appraisal of The Orchard Enterprises, Inc.

In re TOUSA, Inc.

Towerview LLC v. Cox Radio, Inc.

In re Trados Inc.

In re Tronox Incorporated

In re U.S. Cellular

U.S. Salt, Inc. v. Broken Arrow, Inc.

Union Illinois 1995 Investment Limited Partnership v. Union Financial Group, Ltd.

Verition Partners Master Fund Ltd. v. Aruba Networks, Inc.

Weisfelner v. Blavatnik (In re Lyondell Chem. Co.)

In re Winstar Communication, Inc.

Wright v. Irish (Hudson Valley Clean Energy, Inc.)

In re Yellowstone Mountain Club, LLC

Look Inside the Guide

Management Projections Guide 2021