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BVU News and Trends March 2021

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

Using a Discounted Cash Flow Methodology in Uncertain Times

A fundamental look at the method taking center stage during the pandemic. This article outlines how the DCF method works and to highlight the nuances and trap doors that will be encountered and must be overcome to reliably apply the method to derive an indication of value that is well reasoned and supportable for the application intended.

LLC buyout at fair value poses ‘conundrum’ for the court

In allowing LLC members to buy out a departing member to avoid the dissolution of the company, a court had to determine the fair value of the departing member’s interest in a holding company.

BVU News and Trends January 2021

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

Navigation Through the Maze in Complex Debt Instruments Valuation

Global convertible security issuance has surged in the wake of the COVID-19 outbreak as companies rush to raise cash to see them through the economic impact. This has resulted in an increase in demand for fair valuation requirement for convertible instruments. However, determination of fair value of convertible instruments can be a challenging task. Multiple provisions and attributes of the underlying security need to be considered and modeled. Join Mark Zyla, Rajesh C. Khairajani, and ...

NICE Value! How to Deploy the Non-Marketable Investment Company Evaluation Method

When it comes to valuing minority interests in family investment entities such as family limited partnerships, business valuation professionals have not often used the income approach. However, in three recent Tax Court cases, the income approach was prominently featured, and, in one case, it was clearly the deciding factor in the court’s decision. Join William Frazier to learn about the nonmarketable investment company evaluation (NICE) method. Learn its origins, what it doesn’t replace, and how ...

New guidance issued on the Payroll Protection Plan

During a recent BVR webinar, speakers report that many business owners will claim their Payroll Protection Plan (PPP) loans will be 100% forgiven.

Providing a Framework for Testing the Reasonableness of Terminal Period Cash Flow Investments

Whether using the traditional Gordon Growth formula or the value driver formula, it is common for a valuer to neglect testing the reasonableness of the capitalized free cash flow used in determining the terminal value and, therefore, derive a terminal value that is incorrect. This is troubling considering how important the terminal value is when concluding an equity value; the terminal value most often accounts for a majority of the concluded enterprise value when applying ...

Total Beta—Where Does It Fit in Valuation Theory

The valuation of any company by the discounted cash flow method is divided into two different tasks: forecasting cash flows and discounting these same cash flows using the appropriate discount rate. The latter requires a good understanding of the risks faced by the subject company's cash flows to be able to determine the appropriate risk premia to compensate a typical willing buyer and satisfy a typical willing seller. There is a high level of ambiguity ...

Restaurant Valuation: Serving Your Clients During the Covid-19 Crisis

Few industries have been as harshly impacted by COVID-19 as the restaurant industry. Join Lynton Kotzin for an overview of the state of the restaurant industry and what the future looks like for different restaurant types. Learn the reasonableness test, value drivers, and proper application of the approaches during these volatile times. Be ready to advise and value your restaurant clients.

High Court orders London Court of International Arbitration to correct damages calculation error

A Russian supply-chain business owner was awarded US$58 million in damages—until the English High Court and judge Sir Ross Cranston reviewed the maths.

PwC opines on the value of distressed assets in going-concern sales under the new Corporate Insolvency and Governance Act 2020

Inactive markets, short time scales, cash-flow constraints, and potential damage due to public knowledge of financial distress may all have increased impact on ‘going concern’ valuations.

Side Effect of COVID-19: Beta Changes Impacting Business Valuations

The COVID-19 pandemic is causing betas and other measures of risk commonly used in company valuations to appear to have changed. Beta is a critical component used by valuation experts when determining the discount rate in business valuation. Even small changes in betas can cause large changes in the discount rate and, consequently, can cause large changes in valuation. In this panel discussion, Dr. Roper and Cliff Ang, CFA, will describe how the COVID-19 pandemic ...

Interesting poll results in latest Hitchner pub

The latest issue of Hardball With Hitchner includes the results of some recent polls that reveal what valuation practitioners are doing to reflect the impact of COVID-19 in valuations.

BVU News and Trends November 2020

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

Global BVU News and Trends November 2020

Business valuation news from a global perspective.

Solvency opinion based on management projections faces Daubert challenge

In a bankruptcy-cum-Daubert case that turned on solvency, a court recently rejected both parties’ claims that the opposing financial expert testimony was inadmissible.

Finkel v. Palm Park, Inc.

In LLC member dispute, court faces “conundrum” where fair value buyout seeks to avoid LLC’s dissolution and court leans on expert’s FMV valuation using net asset value approach premised on “orderly liquidation”; court notes FMV is based on hypothetical actors and transaction, not specific parties.

Court’s Fair Value Determination Leans Heavily on Expert’s Fair Market Valuation Premised on Liquidation

In LLC member dispute, court faces “conundrum” where fair value buyout seeks to avoid LLC’s dissolution and court leans on expert’s FMV valuation using net asset value approach premised on “orderly liquidation”; court notes FMV is based on hypothetical actors and transaction, not specific parties.

Hitchner debuts monthly Hardball publication

James Hitchner (Valuation Products and Services) has released the first issue of Hardball With Hitchner.

How flawed is the risk-free rate for current valuations?

When valuers are expected to supply a DCF analysis (an increasingly frequent need), most start with the risk assumption of a market premium compared to government bonds.

Amid Market Data Volatility, the Best Option Is a More Rigorous DCF

A panel of global valuation experts who conducted a recent webinar co-sponsored by RICS, and also NACVA, the ASA, GACVA, and CBVI gives their comments.

BVU News and Trends September 2020

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

Reopen or Not? A Method for Analyzing a COVID-19-Shuttered Firm

A case study of using external yardstick data to help a client decide whether to hang in there and reopen his business or stay closed for good. This is not a full-blown valuation engagement, but rather a very high-level analysis designed to provide management with an objective basis to help make critical decisions in today’s unpredictable environment.

10 Takeaways From the AAML/BVR Virtual Divorce Conference

Family law attorneys, valuation professionals, and industry experts shared advice during the AAML/BVR Virtual Divorce Conference, which is ongoing and will continue tomorrow, September 24.

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