BV News and Trends May 2024
A monthly roundup of key developments of interest to business valuation experts.
Popular Real Estate DLOC Database Is Not Going Away
Valuation analysts who use the Partnership Profiles real estate database for estimating a discount for lack of control for family limited partnerships have expressed concern about the future of the database. This is a letter from Bruce Johnson with some important news about the database and some recommendations for adjusting methodology.
Global BVU News and Trends April 2024
Business valuation news from a global perspective.
More from Hitchner’s BV Myth Busters
They’re up to Myth No. 12, which is, “to value a minority interest in a private business, you must first value it on a 100% control basis.”
What to do about the dwindling real estate DLOC database
During the recent BVR Power Panel webinar, a question came in from the audience: What are your thoughts about using the 2022 Partnership Profiles data until the company produces a more up-to-date report?
Automatic DLOC for a minority interest? Not so fast
Business valuation analysts generally agree that minority interests in a privately held company are worth less on a per-share basis than controlling interests.
BV News and Trends December 2023
A monthly roundup of key developments of interest to business valuation experts.
Practice opportunity: Buy-sell agreements
A “vast opportunity” for appraisers can be found in buy-sell agreements, according to Jeff Tarbell (Houlihan Lokey) and Riley Busenlener (Chaffe & Associates Inc.), who is also an attorney.
BV 2023, Year in Review: Top 10 List
The year 2023 was full of change. How have high interest rates and market volatility impacted the cost of capital and minority discounts? What were some of the top cases impacting business valuation? What does the new lease accounting standard mean for valuations? What has changed in tax regulation? In this webinar, we highlight 10 major topics that impacted business valuation in 2023 and discuss implications to valuators in the upcoming year.
BV News and Trends November 2023
A monthly roundup of key developments of interest to business valuation experts.
The No. 1 valuation issue that triggers an IRS audit
Discounts continue to be the No. 1 red flag that triggers an IRS audit, according to former IRS manager Michael Gregory (Michael Gregory Consulting LLC), speaking at the recent American Society of Appraisers (ASA) International Appraisers Conference in New Orleans.
Updates to two closed-end fund reports are available
Closed-end fund (CEF) data are commonly used to derive discounts for lack of control (DLOC) for closely held holding companies invested in marketable securities.
BV News and Trends September 2023
A monthly roundup of key developments of interest to business valuation experts.
BVResearch Pro adds to its archive of the ASA’s BV Review
Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.
Implied Control Premiums Through Delaware Appraisal Decisions
The valuation industry has utilized the concepts of control premiums and corresponding discounts for lack of control (DLOC) for decades. There has been considerable debate regarding the application of control premiums paid to acquire public companies, given the likely existence of synergies embedded within those premiums. This article analyzes implied control premiums using Delaware Court of Chancery (the “Court”) decisions in which the Court determined the fair value of the shares of formerly public companies.
Two closed-end fund reports for estimating DLOC are updated
Closed-end fund (CEF) data are commonly used to derive discounts for lack of control (DLOC) for closely held holding companies invested in marketable securities.
Young practitioners question traditional discount methodologies
“Outdated studies” and “emerging quantitative methods” are some reasons why young valuation practitioners are questioning the traditional methodologies for estimating discounts for lack of control and marketability (DLOC and DLOM).
Understanding Control vs. Lack of Control and Applicable Discounts
Please join us for a refresher course on premiums and discounts related to control (or lack of it). Topics covered will include: when discounts for lack of control apply, elements of control, levels of control, what to look for in governing documents regarding the rights of non-controlling owners, developing a non-controlling value directly versus indirectly, control premiums and various sources for premiums and discounts for both operating companies and holding companies, such as Mergerstat, Partnership ...
BV News and Trends March 2023
A monthly roundup of key developments of interest to business valuation experts.
BVResearch Pro adds another issue of the ASA’s BV Review
Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.
Most States Reject Discounts in Appraisals and Oppression Cases—But There Are Important Exceptions
This article discusses, on a state-by-state basis, the rejection and acceptance of discounts for minority interest and lack of marketability in appraisals and in oppression and voluntary withdrawal cases. Discounts for lack of marketability at the shareholder level are rejected in most jurisdictions, but some states, including California and New York, still permit them.
Court sets fair value of 50% interest in realty firm
In Connecticut, a real estate firm had a shareholder agreement that allowed for an independent appraisal if one of the owners wanted out.
BV News and Trends November 2022
A monthly roundup of key developments of interest to business valuation experts.
Prevailing expert comments on ‘moonshine’ case
In an earlier issue, we reported on an appellate court case involving the valuation of an owner’s one-third share in a Tennessee moonshine distillery (click here for the prior coverage).
Buccieri v. New Hope Realty, Inc.
This case arose out of a dispute between the surviving family and a trustee of the founders of New Hope Realty Inc. The parties could not agree on the management and operations of New Hope Realty. On July 7, 2020, a dissolution proceeding was commenced. The defendants elected to purchase the plaintiffs’ shares. Subsequently, the parties could not agree as to the fair value of the plaintiffs’ interest. The plaintiffs asked the court to determine the value. The court held hearings including testimony from expert witnesses from both parties and determined the fair value.