Calculation report used in court but had no rival
Most valuation analysts will not use a calculation report in court. But what if the other side has nothing?
Advanced Topics and Case Studies When Valuing Family Limited Partnerships and LLCs
As professional methodology has advanced and tax court cases have confirmed, employing analytical techniques to value family limited partnerships/LLCs using the income and market approaches allow appraisers to determine an accurate value objectively. Certain types of partnerships may be considered complicated. This webinar will focus on valuing more complex FLPs using case studies. Mr. Johnson will present empirical data that support the use of these objective appraisal methods and share his opinion on current issues ...
Use of Forensic Evidence in a Lost Profits Case
Financial forensics experts are often called upon to measure the lost profits a business suffered as a result of the actions of another party. The measurement typically compares the profits of the company had the defendant not acted inappropriately to the profits that the company actually realized. Because lost profits measurement involves the calculation of the value of something that should have happened but did not, the process must incorporate assumptions and significant reliance upon ...
City of Fort Collins v. Open Int’l, LLC
In a breach of contract suit concerning failure of vendor to deliver software, the court considered and ruled on motions to exclude certain expert witnesses. The court denied most motions while granting some motions in part.
U.S. District Court (Colorado) Rules on Motions to Exclude Testimony of Expert Witnesses
In a breach of contract suit concerning failure of vendor to deliver software, the court considered and ruled on motions to exclude certain expert witnesses. The court denied most motions while granting some motions in part.
Court affirms calculation report in divorce case
A calculation of value is not the “gold standard,” but it is not unacceptable, an Arizona appellate court ruled in a divorce case.
In re Trapp
The primary issue in this Illinois appeal of a divorce decree dealt with the value of a company owning two buildings. The primary tenant in both buildings was the husband’s electrician business. The trial court accepted the value of the real estate company the husband’s business valuation expert, who was not a real estate appraiser, submitted. The business appraiser valued the two buildings using what the court determined to be “competent evidence.”
Illinois Appeals Court Affirms Trial Court’s Acceptance of Real Estate Value in Absence of Wife’s Submission of a Competing Value
The primary issue in this Illinois appeal of a divorce decree dealt with the value of a company owning two buildings. The primary tenant in both buildings was the husband’s electrician business. The trial court accepted the value of the real estate company the husband’s business valuation expert, who was not a real estate appraiser, submitted. The business appraiser valued the two buildings using what the court determined to be “competent evidence.”
In re Navidea Biopharmaceuticals Litig.
A pharmaceuticals company sued its former CEO for, among other things, breach of contract and for a declaratory judgment establishing the contractual rights and obligations of the parties. This resulted in counterclaims by the former CEO, Michael Goldberg. Goldberg submitted for testimony of damages Terry Lee Orr, CPA. In this matter, the company sought to exclude Orr’s testimony and, absent his exclusion, to present their own expert, William F. Murray, CPA, as a rebuttal expert. Goldberg sought to exclude the testimony of Murray. The court excluded portions of Orr’s testimony and denied the exclusion of Murray as a rebuttal expert.
U.S. District Court Partially Excludes Witness in Securities Value Case and Allows Rebuttal Witness
A pharmaceuticals company sued its former CEO for, among other things, breach of contract and for a declaratory judgment establishing the contractual rights and obligations of the parties. This resulted in counterclaims by the former CEO, Michael Goldberg. Goldberg submitted for testimony of damages Terry Lee Orr, CPA. In this matter, the company sought to exclude Orr’s testimony and, absent his exclusion, to present their own expert, William F. Murray, CPA, as a rebuttal expert. Goldberg sought to exclude the testimony of Murray. The court excluded portions of Orr’s testimony and denied the exclusion of Murray as a rebuttal expert.
Mikalacki v. Rubezic
In this Arizona marital dissolution case, the Court of Appeals affirmed the trial court’s acceptance of a calculation of value to determine the value of a couple’s law practice, awarded to the husband as part of the equitable distribution. Other matters not related to valuation issues were part of the appellate decision.
Arizona Appeals Court Affirms Trial Court’s Acceptance of a Calculation of Value
In this Arizona marital dissolution case, the Court of Appeals affirmed the trial court’s acceptance of a calculation of value to determine the value of a couple’s law practice, awarded to the husband as part of the equitable distribution. Other matters not related to valuation issues were part of the appellate decision.
Hester v. Hester
In this Virginia divorce case, the court, among other things, did not accept the valuation of either valuator and instead determined its own value crafted from the two valuations that were submitted. The result, by chance or otherwise, resulted in “splitting the baby.”
Divorce Matter Results in the Court ‘Splitting the Baby’ to Value a 20% Interest in an S Corp. Medical Practice
In this Virginia divorce case, the court, among other things, did not accept the valuation of either valuator and instead determined its own value crafted from the two valuations that were submitted. The result, by chance or otherwise, resulted in “splitting the baby.”
In re Marriage of Brown
In this Illinois divorce case, the appellate court affirmed the circuit court’s determination of value of the husband’s business by the husband’s expert even though evidence was presented that the expert did not follow the AICPA Business Valuation Standards. Further, the husband’s expert did not consider any enterprise goodwill and used an unorthodox method to determine the value of the business. The wife’s expert asserted that the husband’s expert did not provide a fair market value but rather did a “calculation.” The appellate court also affirmed the circuit court’s decision not to exclude the testimony of the husband’s expert witness.
Illinois Appellate Court Does Not Accept Valuation Including Enterprise Goodwill
In this Illinois divorce case, the appellate court affirmed the circuit court’s determination of value of the husband’s business by the husband’s expert even though evidence was presented that the expert did not follow the AICPA Business Valuation Standards. Further, the husband’s expert did not consider any enterprise goodwill and used an unorthodox method to determine the value of the business. The wife’s expert asserted that the husband’s expert did not provide a fair market value but rather did a “calculation.” The appellate court also affirmed the circuit court’s decision not to exclude the testimony of the husband’s expert witness.
BV News and Trends December 2021
A monthly roundup of key developments of interest to business valuation experts.
Walsh v. Vinoskey
This case covered the appellate decisions regarding the well-publicized Vinoskey ESOP case. The appellate court affirmed the district court in deciding that the company owner had extensive knowledge about the company and its prior valuations, and thus it was plausible to infer that “something was off.” There was no clear error in the district court finding that the owner violated ERISA. The appellate court also allowed an offset to damages for the debt the owner forgave.
Court Affirms Violation of ERISA but Allows Offset of Debt Forgiveness in Determining Damages
This case covered the appellate decisions regarding the well-publicized Vinoskey ESOP case. The appellate court affirmed the district court in deciding that the company owner had extensive knowledge about the company and its prior valuations, and thus it was plausible to infer that “something was off.” There was no clear error in the district court finding that the owner violated ERISA. The appellate court also allowed an offset to damages for the debt the owner forgave.
Calculation of value at center of Arizona court battle
A court in Arizona rejected the use of a calculation report, but an appellate court ruled it was wrong to do that and sent the case back to the lower court.
Larchick v. Pollock
The trial court (TC) in this case excluded the evidence of a business valuation expert because he had submitted a calculation of value report and was then asked to testify to it. The expert self-admitted that he would not testify to a calculation of value and had explained in his engagement letter that a valuation engagement would be required for testimony. Despite the exclusion by the TC and the self-admission of the inadequacy of a calculation of value for testimony purposes, the appellate court nevertheless remanded the case in part to determine whether the calculation of value met the requirements of Arizona Rule 702 for allowable evidence.
Arizona Appeals Court Says a Calculation of Value Is Not Per Se Unacceptable
The trial court (TC) in this case excluded the evidence of a business valuation expert because he had submitted a calculation of value report and was then asked to testify to it. The expert self-admitted that he would not testify to a calculation of value and had explained in his engagement letter that a valuation engagement would be required for testimony. Despite the exclusion by the TC and the self-admission of the inadequacy of a calculation of value for testimony purposes, the appellate court nevertheless remanded the case in part to determine whether the calculation of value met the requirements of Arizona Rule 702 for allowable evidence.
COVID-19 to Trigger More Requests for ‘Risky’ Calculation Reports, Expert Says
It’s a settled matter about whether calculation reports “can” be used, but “should” they be used is another issue. Veteran valuation expert Kevin Yeanoplos (Brueggeman and Johnson Yeanoplos PC) explores this concern in a session at the recent BVFLS conference sponsored by the Virginia Society of CPAs (VSCPA).
Reopen or Not? A Method for Analyzing a COVID-19-Shuttered Firm
A case study of using external yardstick data to help a client decide whether to hang in there and reopen his business or stay closed for good. This is not a full-blown valuation engagement, but rather a very high-level analysis designed to provide management with an objective basis to help make critical decisions in today’s unpredictable environment.
Excelling in Litigation and Dispute-Related Valuations: How to Not Get Caught Bringing a Knife to a Gunfight
Preparing a valuation analysis can be difficult enough, let alone defending it against an opposing party questioning your every move. It is important for valuation experts to know how their valuations may be challenged by other experts and work to effectively address these issues pre-emptively. Presenters Sean Saari and Bob Ranallo discuss how to prepare yourself, and your valuation report, when you know your work will be subject to review and critique in a litigation ...