Julie A Su v. Bensen
This case was one in a line of suits the Department of Labor brought against fiduciaries, including trustees and owners of businesses, in ESOP transactions challenging the value of the business the owners/defendants sold. Once again, the DOL won this case choosing the value their expert presented, which was substantially below the purchase price the ESOP paid for the business.
The U.S. District Court (Arizona) Accepts the Valuation of the DOL’s Expert in Finding the Defendants Breached Their Fiduciary Duties (ESOP)
This case was one in a line of suits the Department of Labor brought against fiduciaries, including trustees and owners of businesses, in ESOP transactions challenging the value of the business the owners/defendants sold. Once again, the DOL won this case choosing the value their expert presented, which was substantially below the purchase price the ESOP paid for the business.
A Channel Analysis Is Key When Valuing a Fast-Food Restaurant
There has been a seismic shift in the operations of limited-service restaurants since the pandemic—and there’s no sign of reverting. Channels of revenue have been upended. Therefore, an analysis along these lines is important when valuing these entities, advises an expert in this space.
BV News and Trends May 2024
A monthly roundup of key developments of interest to business valuation experts.
Hitchner busts myth about using a CCF on a large firm
Many valuation analysts “would never be caught dead” valuing a large business using a capitalized cash flow (CCF), writes Jim Hitchner (Valuation Products and Services) in the latest issue of Hardball With Hitchner.
Key Points From Hitchner’s Annual BV Update
A recap of Jim Hitchner’s look at the major issues in BV over the past year, including long-term growth rates, the three-stage DCF, normalizing the risk-free rate, cost of capital, plagiarism, lack of liquidity on a 100% interest, and more.
Harvesting Knowledge: The Valuation of Wineries
A winery is a unique business that is easy to understand but difficult to value. This presentation will dig into the anatomy of a transaction and how deals are priced and closed as well as the valuation of a winery for compliance purposes. These different scopes of work present different challenges that focus on a buildup of value and assets combined with a fundamental understanding and value of consolidated cash flows. We will present two ...
New issue of ASA’s BV Review added to BVResearch Pro
Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.
Midyear or End of Year Present Value Factors? Clues from Valuation in Discrete and Continuous Time
This article addresses whether appraisers should be using midyear or end-of-year present value factors. Although this is a topic that other authors and I have addressed, this article has some unique and novel approaches to the topic. The mathematics in this article accounts for cash flow growth within and between years rather than between years only, as others have modeled. We model in both discrete and continuous time, with discrete time in multiple time frames ...
Two Ways to Treat the Vanishing Bonus Depreciation Tax Break
Michelle Gallagher and Nathan Olberding (both with Adamy Valuation) present a nice example of how to consider the sunsetting of the bonus depreciation rules in a valuation. The rules were enacted by the Tax Cuts and Jobs Act (TCJA).
Global BVU News and Trends February 2024
Business valuation news from a global perspective.
Hitchner’s annual review of need-to-know BV topics
Over 500 attendees listened to Jim Hitchner (Valuation Products and Services) do his annual review of recent need-to-know concepts, data, models, and methods in business valuation. Here are a few key points from the two-hour webinar.
Today! Hitchner’s annual BV update webinar
BVWire looks forward to Jim Hitchner’s annual webinar where he reviews new concepts, data, models, and methods that have emerged in business valuation over the past year.
Business tax break extensions stalled
At the time of this writing, the tax extenders legislation is still tied up in the Senate.
Valuation of business hit by COVID-19 in recent divorce case
If you haven’t done so already, sooner or later you will value a business affected by COVID-19.
In re Marriage of Bornhofen
In this Illinois divorce case, the trial court adopted the value of the husband’s expert as to the value of the husband’s business and rejected the wife’s expert’s value. The trial court determined that the husband’s expert’s value was the only credible value. The wife sought to introduce additional valuation evidence, which the trial court also rejected. The appellate court affirmed the decision of the trial court.
Appellate Court (Illinois) Affirms Trial Court’s Rejection of One Expert’s Business Value and Adopts the Other Expert’s Value
In this Illinois divorce case, the trial court adopted the value of the husband’s expert as to the value of the husband’s business and rejected the wife’s expert’s value. The trial court determined that the husband’s expert’s value was the only credible value. The wife sought to introduce additional valuation evidence, which the trial court also rejected. The appellate court affirmed the decision of the trial court.
Dawson v. Dawson
The court of appeals, in an Arizona divorce case, affirmed the decision of the Superior Court to accept the wife’s expert’s value of the husband’s business. The wife’s expert used a three-year look back average of cash flows, while the husband’s expert utilized the most current year’s cash flow.
Court Chooses Three-Year Average Cash Flow Over Single to Determine Value of Husband’s Business—Appellate Court Affirms
The court of appeals, in an Arizona divorce case, affirmed the decision of the Superior Court to accept the wife’s expert’s value of the husband’s business. The wife’s expert used a three-year look back average of cash flows, while the husband’s expert utilized the most current year’s cash flow.
New Research Finds That Industries Have Different Growth Rates
An update to ongoing research by Roger Grabowski (Kroll) and Dr. Ashok Abbott (West Virginia University) supports the use of different long-term growth rates for different industries and the use of the three-stage DCF.
The CEIV Is Gone But the MPF Will Endure—Here’s an Example
The Certified in Entity and Intangible Valuations (CEIV) credential has been discontinued, but the Mandatory Performance Framework (MPF) will continue to be used. In fact, a revision is expected to make it more streamlined. Here are its guidelines for documenting management projections that are worthy of repurposing.
BV News and Trends November 2023
A monthly roundup of key developments of interest to business valuation experts.
New Book Offers Template for Assessing ESG Impact on Firm Value
Based on some case studies, a new book includes a template that summarizes steps in assessing whether ESG factors are material enough to integrate into a valuation. The book is Valuation and Sustainability—A Guide to Include Environmental, Social, and Governance Data in Business Valuation, edited by Dejan Glavas (ESSCA, School of Management, Boulogne-Billancourt, France), who also wrote several chapters.
Taylor Precision Prods. v. Larimer Grp., Inc.
In the damages portion of this complex suit, the court determined damages based on the plaintiff’s expert’s determination and report of same. It awarded damages on the first component of his damages calculation, the damages based on an adjusted “lost” EBITDA, but not on the second component, which the court deemed to be speculative.
Plaintiff Awarded Direct Damages But Not Speculative ‘Growth Damages’
In the damages portion of this complex suit, the court determined damages based on the plaintiff’s expert’s determination and report of same. It awarded damages on the first component of his damages calculation, the damages based on an adjusted “lost” EBITDA, but not on the second component, which the court deemed to be speculative.