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Market Volatility and Its Impact on the Valuation Advisors Pre-IPO Database

The recent stock market volatility has ripple effects on pre-IPO studies, which are used to estimate a discount for lack of marketability (DLOM).

Global BVU News and Trends April 2020

Business valuation news from a global perspective.

SRO Crowd Sees Latest Update to Leading Pre-IPO Study

The largest audience for a BVR webinar in recent memory watched as Brian Pearson put the Valuation Advisors Lack of Marketability Discount Study through its paces. Pearson, the creator of the study, discussed new data added in 2019, misconceptions and criticisms of pre-IPO data, and uses for the data that extend beyond estimating a DLOM.

Introducing the Rudich/Jaroudi BIZCOMPS DLOM Study

The authors do an analysis of the BIZOMPS database of sales of small private companies to uncover an imbedded discount for lack of marketability (DLOM) in a specific industry. The authors would like feedback on this study and methodology.

Tax Court spurns IRS’ gift tax valuation theory and methodology

In a gift tax dispute, the U.S. Tax Court recently found for the taxpayer when it rejected the unusual reasoning and methodology the Internal Revenue Service’s trial expert proposed to keep low the discounts applicable to the nonvoting membership units in two limited liability companies (LLCs).

A sad note …

The American Society of Appraisers announced that ASA International Past President Ronald M. Seaman, FASA, passed away at 88 years old on Tuesday, March 10.

Best Practices – Thought Leadership in Valuation, Damages, and Transfer Price Analysis

March 2020 Hardcover

Robert F. Reilly, Robert P. Schweihs

Best Practicesincludes more than 1,200 pages of thought leadership on a wide range of topics, including the valuation of private company securities and intangible assets, valuation for property tax purposes, valuation for ESOPs, fair value measurement for financial accounting purposes, transfer price analysis, and economic damages measurement. Learn more >>

Pre-IPO Studies Endure to Retain Foothold in the DLOM Toolbox

Pre-IPO studies have withstood criticisms and court challenges to remain a viable method for developing a discount for lack of marketability (DLOM). Over a third (38%) of valuation experts use them, according to a survey. The article includes an interview with Brian Pearson of Valuation Advisors, a provider of the largest pre-IPO study.

New study gleans DLOMs from the BIZCOMPS database

Imbedded discounts for lack of marketability (DLOMs) have been uncovered in a new study of the BIZCOMPS database of sales of small private companies.

Journal of Business Valuation 2015 Edition

From the CBV Institute ...

Key issues in valuations for divorce

One of the best attended sessions at last fall’s ICAEW Valuations Conference in London was ‘Valuations in Divorce,’ led by PwC’s Sarah Middleton and Jonny Rodwell. These cases continue to show up in the courts—and in the morning papers.

Demystifying the Complex World of Discounts for Lack of Marketability (Part 2)

This is part 2 of the DLOM webinar from 2/12/2020. 25%? 35%? 45%? What’s the deal with discounts for lack of marketability? Pasquale Rafanelli dives into what DLOMs are, when they should be applied, and how to apply them. Learn about the different types of approaches and methods that valuation experts can use to quantify the DLOM, along with practical pros and cons of each approach and method. Part 2 discusses the analytical approaches and ...

Demystifying the Complex World of Discounts for Lack of Marketability (Part 1)

Please note: This is a rebroadcast. 25%? 35%? 45%? What’s the deal with discounts for lack of marketability? Pasquale Rafanelli dives into what DLOMs are, when they should be applied, and how to apply them. Learn about the different types of approaches and methods that valuation experts can use to quantify the DLOM, along with practical pros and cons of each approach and method. This session focuses on benchmark study approaches and security-based approaches. Please note ...

Connecticut court affirms lower court's decision not to tax affect

In a buyout dispute involving a Connecticut family business, an appellate court recently upheld the trial court’s earlier decision not to tax affect the earnings of the company in valuing the departing shareholder’s interest, even though experts for both sides tax affected.

DLOM support: the more the better

Two main approaches for estimating a discount for lack of marketability (DLOM) are restricted stock studies and pre-IPO studies.

BVU News and Trends January 2020

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

Pre-IPO Revival: Up your DLOM Game in 2020

Pre-IPO data are very useful for valuators. Join Brian Pearson, creator of the Valuation Advisors Lack of Marketability Discount Study, to learn how to calculate discounts using different types of data (stock, options, and convertible preferred stock) and learn why the abundance of pre-IPO data is useful versus smaller samples of discount data. Brian will lead a discussion of prior criticisms of some sources of data and address those criticisms as they pertain to Valuation ...

Criticisms of pre-IPO data addressed in free webinar today

A valuation expert recently told us that, in an engagement he just completed, he did not use any of the pre-IPO studies in developing a discount for lack of marketability (DLOM).

Connecticut court says ‘no’ to tax affecting but limits the reach of its ruling

In a buyout dispute involving a Connecticut family business, an appellate court recently upheld the trial court’s decision not to tax affect the earnings of the company in valuing the departing shareholder’s interest, even though experts for both sides tax affected.

Little-known feature of the VA pre-IPO study

Did you know that the Valuation Advisors Lack of Marketability Pre-IPO Discount Study also contains convertible preferred stock (CPS) transactions?

BV data: Sometimes it just ‘is what it is’

Empirical data are the backbone of defensible business valuations, but there are strengths and weaknesses with all data.

R.D. Clark & Sons, Inc. v. Clark

Trial court’s fair value determination in buyout dispute involving family business withstands appeal, including decision not to tax affect or apply majority and minority discounts; appellate court finds there is no controlling state law on the issues and upholds trial court’s findings on facts.

Courts Reject Tax Affecting and Use of Discounts in Connecticut Buyout Dispute

Trial court’s fair value determination in buyout dispute involving family business withstands appeal, including decision not to tax affect or apply majority and minority discounts; appellate court finds there is no controlling state law on the issues and upholds trial court’s findings on facts.

A Masterclass in the Valuation of Family Limited Partnerships and LLCs (A BVR Web Workshop)

As professional appraisal methodology has advanced, so has the valuation of family limited partnerships (FLPs) and limited liability companies (LLCs). Adopting an analytical method for valuing FLPs and LLCs using the income and market approaches allows appraisers to more accurately and objectively determine a value that can withstand the scrutiny of IRS challenges. Experts Bruce Johnson, Jim Park, and Spencer Jefferies conduct case studies to teach the best practices for valuing noncontrolling, nonmarketable FLP and ...

Do You Really Know Your Data for Determining Discounts?

The analysis of a popular data source used in determining discounts for asset-holding entities. An advanced understanding of the data is critical in order to avoid overvaluing your client’s investments by understating the discounts.

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