A Look Back: Including ESG in Valuation Models
Quantified the impact of environmental, social, and governance (ESG) factors and measuring their effects is not a new phenomenon. Thanks to the BVResearch Pro platform, here are two ways experts have done this before.
BV News and Trends March 2023
A monthly roundup of key developments of interest to business valuation experts.
High ESG scores lower the cost of capital, study finds
A recent paper says there is significant evidence that companies having a higher environmental, social, and governance (ESG) score have a lower cost of capital.
Alternate Valuation Methods in the Era of COVID-19
COVID-19 has substantially affected the financial and economic characteristics of privately held and publicly traded businesses throughout the U.S. In this presentation, the presenters will address the valuation impact of COVID-19 and the potential distortions that can occur when traditional valuation approaches and methods are mechanically applied. In the current environment, it is important for analysts to think “outside-the-box” when performing business valuations with valuation dates occurring during the first and second quarter of 2020.
Valuation underpinning contested stock sale reflects fair value, Court of Chancery says
In a breach of fiduciary duty action arising out of a controversial stock sale, the Delaware Court of Chancery dismissed the plaintiff’s attacks on the underlying valuation, noting the appraiser was “exceptionally knowledgeable about the industry” and held “informed beliefs” as to the company’s specific structure.
Untested beta calculation KOs expert’s credibility and fair value conclusion
In a statutory appraisal case with several twists, the Delaware Court of Chancery recently agreed with the parties’ experts that a discounted cash flow analysis was the only way to determine fair value while rejecting, unequivocally, the company expert’s novel approach to calculating beta.
Manichaean Capital, LLC v. SourceHOV Holdings, Inc.
In appraisal proceeding, Court of Chancery adopts petitioner expert’s DCF-based model for calculating fair value, making slight adjustment to expert’s size premium; on beta calculation, court finds respondent expert’s novel approach “does not survive judicial scrutiny” and raises Daubert issues.
Novel Beta Method Occasions Rebuke From Court of Chancery in Appraisal Case
In appraisal proceeding, Court of Chancery adopts petitioner expert’s DCF-based model for calculating fair value, making slight adjustment to expert’s size premium; on beta calculation, court finds respondent expert’s novel approach “does not survive judicial scrutiny” and raises Daubert issues.
Coster v. UIP Companies, Inc.
In breach of fiduciary duty action, court says stock sale passes enhanced fairness review; appraiser valuing real estate investment services company before sale is eminently qualified and knowledgeable about industry; capitalized cash flow method “generated a reliable indicator” of company’s value.
Valuation Underlying Controversial Stock Sale Satisfies Highest Scrutiny
In breach of fiduciary duty action, court says stock sale passes enhanced fairness review; appraiser valuing real estate investment services company before sale is eminently qualified and knowledgeable about industry; capitalized cash flow method “generated a reliable indicator” of company’s value.
Private debt is now available for smaller UK companies ‘overlooked’ by clearing banks, BDO says
Steve Carr, corporate finance director for debt advisory of BDO London, commented in a client communication last month that BDO has ‘witnessed lots of instances where debt funds have provided solutions that clearing banks have been unable to match (albeit this comes at a price).’
Current Observations on the Valuation Impact of the TCJA
Based on sessions at the 2018 AICPA Forensic & Valuation Services (FVS) Conference in Atlanta.
BVU News and Trends February 2019
A monthly roundup of key developments of interest to business valuation experts.
IRS issues proposed regs on business interest limits
The IRS proposed rules that would govern the new business interest expense deduction limit in the Tax Cuts and Jobs Act (TCJA).
BVU News and Trends June 2018
A monthly roundup of key developments of interest to business valuation experts.
New IRS guidance on interest expense limits
The Treasury Department and the IRS have issued guidance (Notice 2018-28) for computing the business interest expense limitation under the Tax Cuts and Jobs Act.
Financial Statement analysis and Business Valuation for the Practical Lawyer
n FINANCIAL STATEMENT ANALYSIS AND BUSINESS VALUATION FOR THE PRACTICAL LAWYER , Dickie, Robert B. American Bar Association, Section of Business Law , P.O. Box 10892, Chicago, Ill. 60610-0892 ...
Debt and Equity Weightings in WACC
Evans introduces the formula below to simplify the iteration process when employing the single period capitalization method. The formula solves for the fair market value of equity based on independent factors that are generally known in advance by the valuation professional.
Hintmann v. Weber (II)
At issue is the valuation of petitioner's ESOP-held shares.
Special Master Appointed to Resolve Calculations
This is a follow-up to the Chancery Court's opinion dated Feb. 17, 1998, on petitioners' Petition for Appraisal of ESOP-held shares.