Court Reverses Its Order to Strike Expert Testimony That Utilized the Discounted Cash Flow Method in Valuing a Business
This case was a motion to reconsider the court’s ruling that struck expert testimony because the expert used the discounted cash flow method to determine the value of a business that went out of business. Upon reconsideration, the court decided that such method was allowable in this case and, therefore, the testimony should be reinstated and presented to the jury for use in determining damages.
V5 Techs., LLC v. Switch, Ltd.
This case was a motion to reconsider the court’s ruling that struck expert testimony because the expert used the discounted cash flow method to determine the value of a business that went out of business. Upon reconsideration, the court decided that such method was allowable in this case and, therefore, the testimony should be reinstated and presented to the jury for use in determining damages.
IRS sending agents to NACVA’s BV training
The IRS is sending 79 agents to business valuation training provided by the National Association of Certified Valuators and Analysts (NACVA), according to former IRS manager Michael Gregory (Michael Gregory Consulting LLC).
Premium Gap Closes Between Strategic and Financial Acquisitions
The difference between the premium strategic buyers pay for acquisitions versus what financial buyers pay has decreased, according to recent data in the Factset MergerStat/BVR Control Premium Study.
BV News and Trends October 2021
A monthly roundup of key developments of interest to business valuation experts.
Latest issue of the ASA BVReview now in BVRPro
The BVResearch Pro platform contains the full archive of BVReview (going back to 1982!), the business valuation journal of the American Society of Appraisers.
Book Review: Business Valuation: An Integrated Theory (BVIT)
Today, there are many fine business valuation textbooks available to the professional business appraiser for guidance and support. The purpose of these publications is to equip the readers with the methodology, techniques and models necessary to produce a credible valuation opinion and report.
A Current View of the Restricted Stock Studies and Restricted Stock Discounts
Although there is relevant evidence in some restricted stock studies that can be helpful for marketability discount determinations, comparisons with average discount observations from these studies do not provide a meaningful methodology to estimate marketability discounts. We conclude this despite the fact that too many valuation analysts continue to rely on simplistic comparisons with averages of restricted stock discounts from dated studies in their marketability discount determinations.
BV News and Trends September 2021
A monthly roundup of key developments of interest to business valuation experts.
Red Flags Appear in BVR’s DLOM Survey Results
There are a number of areas of concern in the responses to BVR’s recent survey on methodology and practice for estimating a discount for lack of marketability (DLOM).
Global BV News and Trends September 2021
Business valuation news from a global perspective.
Relying on Guideline Public-Company Data in Appraisals of Closely Held Interests
What are the guidelines for using the guideline public-company data in appraisals of closely held interests? Join Rob Schlegel to learn the background and logic for appraisers relying on public-company transaction data, including the advantages and disadvantages. There are a variety of sources for these data, and several examples will be provided as to how these data are used. Winnowing the initial data group and concluding on the best fit given the client conditions imply ...
2021 Johnson/Park DLOM study is now available
The Johnson/Park empirical method to estimate a discount for lack of marketability (DLOM) is one of the most popular methods business appraisers use for this purpose, according to a recent BVR survey.
2021 Discount for Lack of Marketability Study
September 2021 PDF
Bruce A. Johnson, James R. Park
Johnson/Park
BVR’s Discount for Lack of Marketability Survey: Results Show Some Red Flags to Watch For
BVR’s recent survey on methodology and practice for estimating a discount for lack of marketability (DLOM) garnered over 200 responses. After analyzing the results, we identified several red flags that were worthy of further exploration. Read on to learn more!
Expelled partner should get FMV—but of what?
An Oregon appellate case deals with compensation for a partner’s 25% interest in a business after he is expelled from the firm.
Mercer chimes in on BVR DLOM survey
“Our profession has a long way to go in terms of understanding what DLOMs, or marketability discounts, really are,” concludes Chris Mercer (Mercer Capital) in his analysis of BVR’s 2021 DLOM survey.
Walsh v. Bowers
A district court has ruled “decisively” against the Department of Labor (DOL) in an ESOP valuation case, stressing that the DOL failed to follow standard valuation practices.
District Court Rules ‘Decisively’ Against the DOL in an ESOP Overvaluation Case
The Department of Labor sued the defendants, which included two individual owners, Bowers & Kubota Consulting Inc. and the Bowers & Kubota ESOP, alleging that the defendants had violated ERISA laws by manipulating data to induce the ESOP to pay $40 million for the shares of the individual shareholders that the DOL claimed was in excess of the fair market value of the shares. After extensive testimony of valuation experts and analysis of the facts of the case, the court determined that no ERISA violations have been established.
Frazier reviews ‘very important’ book on business valuation
A very comprehensive review of an important book is in the Summer 2021 issue of the Business Valuation Review™, published by the American Society of Appraisers.
QMDM increases foothold in DLOM toolbox
Almost a quarter (22%) of valuation analysts polled say they use the quantitative marketability discount model (QMDM) for quantifying a discount for lack of marketability (DLOM).
Cheng v. Coastal Lb Assocs.
This case concerned the purchase of minority interests in a California limited liability company under the Corporate Code concerning the purchase of these interests in lieu of a liquidation of the company. The appellate court affirmed the trial court’s order confirming the purchase of these interests at a discounted fair market value.
California Court of Appeal Allows a Discount for Lack of Control in the Buyout of 25% Interests in an LLC
This case concerned the purchase of minority interests in a California limited liability company under the Corporate Code concerning the purchase of these interests in lieu of a liquidation of the company. The appellate court affirmed the trial court’s order confirming the purchase of these interests at a discounted fair market value.
Three Court Cases You Must Read Before Writing Your Next Valuation Report
Former IRS officials give their insights into the thinking of the IRS on business valuations. This was a session at NACVA’s recent 2021 Business Valuation and Financial Litigation Hybrid and Virtual Super Conference.
Pourmoradi v. Gabbai
This California appellate case reviewed the trial court’s decision that discounts for lack of control and lack of marketability were not appropriate in determining the value to be paid to the plaintiffs in this corporate dissolution case where the remaining 50% owners exercised their right to purchase the plaintiff’s 50% interest in the LLC.