BVU News and Trends May 2018
A monthly roundup of key developments of interest to business valuation experts.
Reasonable Compensation After the Tax Cuts & Jobs Act: To Infinity and Beyond
Many owner-employees are looking at their compensation options under the Tax Cuts and Jobs Act of 2017. Join Ron Seigneur and Kevin Yeanoplos as they explore how these options impact value. The primary focus is in relation to the new 20% deduction of Qualified Business Income for eligible pass-through entities, but discussion will also include the relevant reasonable compensation impact for all business owners. Appraisers should also take this opportunity to get refreshed on owner-employee ...
Willamette’s spring Insights issue is available
The Spring 2018 issue of Insights from Willamette Management Associates is titled “Thought Leadership in Breach of Fiduciary Duty Tort Claims—Valuation and Damages Analyses.”
Hospice Valuation: Trends, Value Drivers, and Physician Compensation
Hospice has become a primary focus for buyers looking for stable reimbursement and good margins in the healthcare industry. What do hospice providers do? And why are the multiples for these companies so high? Join Darcy Devine and William Hamilton for an examination of the business model behind many hospice companies, as well as the risks and opportunities that investors face in this arena. Learn about the fair market value and commercial reasonableness issues related ...
No takers yet for Dietrich and Smith debate challenge
A few issues ago, we relayed the message that healthcare valuation experts Mark Dietrich and Tim Smith have offered to debate anyone who disagrees with their views on the fair market value of physician compensation.
Letter to the Editor: Comments on a Recent Article on the FMV of Physician Compensation
A letter in response to the article, “Dietrich and Smith’s Debate Challenge Re: FMV of Physician Pay,” that appeared in the March 2018 issue of Business Valuation Update that presents new thinking and approaches.
Tax Reform Puts Broader Spotlight on Reasonable Comp
Ron Seigneur and Kevin Yeanoplos, the co-authors of a guide on reasonable compensation, explain how tax reform has put more focus on the matter.
Dietrich and Smith’s Debate Challenge Re: FMV of Physician Pay
Mark Dietrich and Tim Smith will debate anyone who disagrees with their views on the fair market value of physician compensation, views that refute conventional wisdom. BVR will provide a forum for the debate.
Survey says? Alternative approach to the fair market value of physician compensation
For well over a decade, the use of physician compensation surveys has been the predominant paradigm for establishing the fair market value of physician compensation. In two recent BVR webinars on the fair market value of physician compensation, healthcare valuation experts Mark Dietrich and Timothy Smith refute conventional wisdom regarding the compensation hospitals pay to employ physicians and offer an alternative approach to determine fair market value.
Valuation Experts Give Initial Thoughts on Tax Reform
Valuation experts were asked for their initial impressions on what to consider when doing valuations under the Tax Cuts and Jobs Act. This will be an evolving discussion.
Takeaways From the AICPA FVS Conference
We attended many of the sessions at the AICPA’s 2017 Forensic and Valuation Services conference in Las Vegas along with over 1,000 attendees and found no shortage of tips, ideas, and advice.
Use and Misuse of Survey Data to Set Physician Compensation
Timothy Smith (Ankura Consulting) interviews Meghan Wong, assistant director, data solutions, Medical Group Management Association (MGMA), in an excerpt from the recently released BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, 2nd edition.
Springer v. Library Store
Court upholds lower court ruling that there was no mismanagement of corporate assets; plaintiff failed to show excessive officer compensation and was properly precluded from using testifying expert to introduce another appraiser’s report on excessive rent.
Court Clarifies Application of Rule 703 to Expert Testimony
Court upholds lower court ruling that there was no mismanagement of corporate assets; plaintiff failed to show excessive officer compensation and was properly precluded from using testifying expert to introduce another appraiser’s report on excessive rent.
ASA BVers convene in Houston for the Advanced BV Conference
The conference sessions were an excellent mix of theory and practice—ideas that you can use in your practice right away.
Tax Court Favors IRS’s Cost Markup Analysis to Compute Management Fee
In a suit over fees paid by taxpayers’ operating companies to taxpayer-controlled management company, Tax Court says IRS expert’s cost markup analysis produces most credible arm’s-length management fee; this fee represents the allowable deduction amount.
Wycoff v. Commissioner
In a suit over fees paid by taxpayers’ operating companies to taxpayer-controlled management company, Tax Court says IRS expert’s cost markup analysis produces most credible arm’s-length management fee; this fee represents the allowable deduction amount.
Appreciation Case Highlights Contribution by Nonowner Spouse
Increase in value of owner’s minority interests in companies was due to owner’s efforts, which were “facilitated” by nonowner’s work in home; appreciation was active and marital property; no error in awarding nonowner half of profits from sale of assets.
Court Highlights Role of Community Labor in Goodwill Analysis
Appeals court says record supports nonowner spouse’s claim to a share of owner’s CPA’s practice; business changed from separate to community property, and most of its value consisted of professional goodwill, which was created by community labor.
Expert’s Best-Effort Medical Practice Valuation Holds Up on Appeal
Appeals court upholds medical practice valuation despite gaps in expert analysis, including failure to analyze goodwill and exclude premarriage value portion of practice; expert’s job was “complicated” due to owner-spouse’s noncompliance with discovery.
In re Marriage of Vandal
Appeals court says record supports nonowner spouse’s claim to a share of owner’s CPA’s practice; business changed from separate to community property, and most of its value consisted of professional goodwill, which was created by community labor.
Court Highlights Role of Community Labor in Goodwill Analysis
Appeals court says record supports nonowner spouse’s claim to a share of owner’s CPA’s practice; business changed from separate to community property, and most of its value consisted of professional goodwill, which was created by community labor.
Appreciation Case Highlights Contribution by Nonowner Spouse
Increase in value of owner’s minority interests in companies was due to owner’s efforts, which were “facilitated” by nonowner’s work in home; appreciation was active and marital property; no error in awarding nonowner half of profits from sale of assets.
Allison v. Allison
Increase in value of owner’s minority interests in companies was due to owner’s efforts, which were “facilitated” by nonowner’s work in home; appreciation was active and marital property; no error in awarding nonowner half of profits from sale of assets.
Proxy Disclosed Sufficient Valuation Data to Allow Informed Vote on Merger
Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.