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Construction Company Valuation

This webinar will provide insight into valuing residential and commercial construction companies. We will cover the approaches and methods that are most commonly used. In addition, we will cover the nuances that one needs to be aware of when valuing these types of companies.

More news from the ASA Fair Value Conference

In addition to the news that the CEIV credential was being discontinued (see previous item in this issue), here are some other takeaways from the ASA Fair Value Spring Conference in New York City on May 4.

Court OKs including PPP loan in cash flows for CCF

In a Vermont divorce case, the valuation expert for the husband valued his business by excluding proceeds from a Paycheck Protection Program (PPP) loan as a one-time windfall for purposes of a capitalized cash flow (CCF) analysis.

BV News and Trends March 2023

A monthly roundup of key developments of interest to business valuation experts.

Expert Survives Daubert—Allowed to Testify as to Lost Business Value

The case dealt with two motions to preclude testimony of an expert witness as to the loss in value of the plaintiff’s business. The plaintiff was an environmental consulting firm allegedly injured as a result of the actions of certain employees including breach of their fiduciary duty. The court concluded that the witness may testify because his report was based on sufficient facts and data and he applied reliable principles to the facts of this case.

White Buffalo Env’t, Inc. v. Hungry Horse, LLC

The case dealt with two motions to preclude testimony of an expert witness as to the loss in value of the plaintiff’s business. The plaintiff was an environmental consulting firm allegedly injured as a result of the actions of certain employees including breach of their fiduciary duty. The court concluded that the witness may testify because his report was based on sufficient facts and data and he applied reliable principles to the facts of this case.

Griggs v. Griggs

The husband appealed this Vermont divorce case to the State Supreme Court inter alia to challenge the inclusion of PPP loan proceeds by the wife’s expert in determining the cash flows of the husband’s electrician services business for purposes of determining a value of the business using the capitalization of earnings method. The Supreme Court affirmed the lower trial court on this issue and allowed the PPP proceeds to be included in the cash flows.

Vermont Supreme Court Allows Inclusion of PPP Proceeds in Cap Earnings Cash Flow for Determination of Value

The husband appealed this Vermont divorce case to the State Supreme Court inter alia to challenge the inclusion of PPP loan proceeds by the wife’s expert in determining the cash flows of the husband’s electrician services business for purposes of determining a value of the business using the capitalization of earnings method. The Supreme Court affirmed the lower trial court on this issue and allowed the PPP proceeds to be included in the cash flows.

BV News and Trends February 2023

A monthly roundup of key developments of interest to business valuation experts.

O’Mahony v. Whiston

In a case of disputes among the owners of an Irish soccer bar in New York City, the court awarded economic damages and punitive damages after the controlling owners took proceeds of a lease buyout of the bar’s prior location to establish a new identical bar in a new location while cutting out the minority owners from the new bar. Using assets of the old corporation and thereby misappropriating a corporate opportunity of the old corporation, they started a new identical bar (including the name) in a new location in a corporation the control owners set up.

New York Court Awards Lost Corporate Opportunity and Punitive Damages in Restaurant-Related Case

In a case of disputes among the owners of an Irish soccer bar in New York City, the court awarded economic damages and punitive damages after the controlling owners took proceeds of a lease buyout of the bar’s prior location to establish a new identical bar in a new location while cutting out the minority owners from the new bar. Using assets of the old corporation and thereby misappropriating a corporate opportunity of the old corporation, they started a new identical bar (including the name) in a new location in a corporation the control owners set up.

Recap of the Biggest BV Event of 2022—the AICPA FVS Conference

The AICPA’s plans for its forensics and valuation section, incredible frauds, an opportunity in bankruptcy, tips for determining goodwill, and the future of BV are discussed in this recap article—the first of several that will cover this biggest conference of the year.

BV News and Trends January 2023

A monthly roundup of key developments of interest to business valuation experts.

Accounting standards needed for crypto, urges paper

“We recommend that accounting regulators undertake standard-setting specifically for cryptocurrencies instead of allowing companies to choose which existing standard to apply and how to do so,” says a new paper, “Financial Reporting for Cryptocurrency.”

Novosel v. Azcon Inc.

In this ESOP-related case, the plaintiff (an ESOP plan beneficiary) raised three complaints, two of which were primarily the result of the performance and use by the ESOP of an interim valuation date for measurement of the value of her shares for her retirement payments made over time. There was also discussion regarding the interim value determined and whether a PPP loan of $1.2 million should have been considered. The defendants moved for dismissal on the first two accounts. The court denied the dismissal of the first complaint in regard to assertions that the use of the interim valuation date was arbitrary and capricious. It also allowed the filing by the plaintiff of a second amended complaint. The court granted the defendants’ motion to dismiss the plaintiff’s complaint regarding the asserted cutback of accrued benefits.

ESOP Case Motions Revolve Primarily Around an Interim Valuation and Consideration of a PPP Loan

In this ESOP-related case, the plaintiff (an ESOP plan beneficiary) raised three complaints, two of which were primarily the result of the performance and use by the ESOP of an interim valuation date for measurement of the value of her shares for her retirement payments made over time. There was also discussion regarding the interim value determined and whether a PPP loan of $1.2 million should have been considered. The defendants moved for dismissal on the first two accounts. The court denied the dismissal of the first complaint in regard to assertions that the use of the interim valuation date was arbitrary and capricious. It also allowed the filing by the plaintiff of a second amended complaint. The court granted the defendants’ motion to dismiss the plaintiff’s complaint regarding the asserted cutback of accrued benefits.

Hot Topics at the 2022 VSCPA Forensic and Valuation Conference

It was back to in-person attendance at the 22nd annual Forensic and Valuation Conference hosted by the Virginia State Society of CPAs. Topics included the income approach, effective recruiting, reasonable compensation, guideline transactions, surviving cross-examination, IRS developments, and a “Hardball With Hitchner” session that covered some front-burner issues.

Two AICPA fair value guides being revised

At last week’s ASA Fair Value Virtual Conference, several sessions focused on some revised versions of guidance from the AICPA.

U.S. Appellate Court Rules Sufficient Evidence to Support Future Damages

In this partnership dispute, the 11th Circuit U.S. Appellate Court affirmed the district court and ruled that trial testimony of witnesses provided specific evidence that an energy utility company needed technicians the partnership provided before the disassociation and was not likely to change in the future. Damages were deemed “reasonably certain.” The defendants’ argument that, without an equitable accounting, the damages were too speculative, was waived because it was first raised post-verdict.

WL All. LLC v. Precision Testing Grp. Inc.

In this partnership dispute, the 11th Circuit U.S. Appellate Court affirmed the district court and ruled that trial testimony of witnesses provided specific evidence that an energy utility company needed technicians the partnership provided before the disassociation and was not likely to change in the future. Damages were deemed “reasonably certain.” The defendants’ argument that, without an equitable accounting, the damages were too speculative, was waived because it was first raised post-verdict.

Blockchain Forensics—Part 1

This presentation is about discovery of cryptocurrency assets in divorce and valuation. This presentation will not cover the origin stories or the inner cryptographic workings of various blockchains and cryptocurrencies. Attendees will learn forensic methods for identifying the existence of cryptocurrency assets, tracing transactions with public sources, and identifying when additional records exist that are accessible by the account holder only.

New Tool in the BV Toolbox—Incorporating Company Specific Risk in Option Pricing Models

The standard practice of accounting for company-specific risk is to leave expected cash flows unchanged and add a CRSP to the discount rate. A preferred methodology would be to adjust expected cash flows for the economic effect of company-specific risk and leave the discount rate unchanged. In this webinar, we will set forth the methodology for adjusting cash flows using a quant-based rather than a judgement-based methodology. We will then calculate call option value via ...

BV News and Trends November 2022

A monthly roundup of key developments of interest to business valuation experts.

New FASB rules on crypto coming in first half of 2023

Under proposed accounting rules, fungible tokens will be measured at fair value as opposed to the cost (less impairment) model.

AICPA session reiterates request for comments on business combinations guide

A session at this week’s AICPA FVS conference discussed the recently released Draft Accounting and Valuation Guide, Business Combinations, which provides guidance and illustrations regarding the accounting and valuation considerations for business combination transactions.

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