BV News and Trends December 2024
A monthly roundup of key developments of interest to business valuation experts.
Appellate court affirms decision regarding overstated projections
A big red flag when using financial projections in a DCF is relying on ones that were prepared for some other purpose, especially if there was a tendency to paint a rosy picture.
BV Myth Busters tackle exit multiple vs. Gordon growth
Is an exit multiple preferable to the Gordon growth model (GGM) for calculating the terminal-year value in a DCF model?
Matter of Magarik v. Kraus USA, Inc. (Kraus III)
This is the full court opinion for Matter of Magarik v. Kraus USA, Inc., 2024 N.Y. App. Div. LEXIS 5239, 2024 NY Slip Op 04964 (October 9, 2024).
Julie A Su v. Bensen
This case was one in a line of suits the Department of Labor brought against fiduciaries, including trustees and owners of businesses, in ESOP transactions challenging the value of the business the owners/defendants sold. Once again, the DOL won this case choosing the value their expert presented, which was substantially below the purchase price the ESOP paid for the business.
The U.S. District Court (Arizona) Accepts the Valuation of the DOL’s Expert in Finding the Defendants Breached Their Fiduciary Duties (ESOP)
This case was one in a line of suits the Department of Labor brought against fiduciaries, including trustees and owners of businesses, in ESOP transactions challenging the value of the business the owners/defendants sold. Once again, the DOL won this case choosing the value their expert presented, which was substantially below the purchase price the ESOP paid for the business.
A Channel Analysis Is Key When Valuing a Fast-Food Restaurant
There has been a seismic shift in the operations of limited-service restaurants since the pandemic—and there’s no sign of reverting. Channels of revenue have been upended. Therefore, an analysis along these lines is important when valuing these entities, advises an expert in this space.
BV News and Trends May 2024
A monthly roundup of key developments of interest to business valuation experts.
Hitchner busts myth about using a CCF on a large firm
Many valuation analysts “would never be caught dead” valuing a large business using a capitalized cash flow (CCF), writes Jim Hitchner (Valuation Products and Services) in the latest issue of Hardball With Hitchner.
Key Points From Hitchner’s Annual BV Update
A recap of Jim Hitchner’s look at the major issues in BV over the past year, including long-term growth rates, the three-stage DCF, normalizing the risk-free rate, cost of capital, plagiarism, lack of liquidity on a 100% interest, and more.
New issue of ASA’s BV Review added to BVResearch Pro
Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.
Two Ways to Treat the Vanishing Bonus Depreciation Tax Break
Michelle Gallagher and Nathan Olberding (both with Adamy Valuation) present a nice example of how to consider the sunsetting of the bonus depreciation rules in a valuation. The rules were enacted by the Tax Cuts and Jobs Act (TCJA).
Global BVU News and Trends February 2024
Business valuation news from a global perspective.
Hitchner’s annual review of need-to-know BV topics
Over 500 attendees listened to Jim Hitchner (Valuation Products and Services) do his annual review of recent need-to-know concepts, data, models, and methods in business valuation. Here are a few key points from the two-hour webinar.
Today! Hitchner’s annual BV update webinar
BVWire looks forward to Jim Hitchner’s annual webinar where he reviews new concepts, data, models, and methods that have emerged in business valuation over the past year.
Business tax break extensions stalled
At the time of this writing, the tax extenders legislation is still tied up in the Senate.
New Research Finds That Industries Have Different Growth Rates
An update to ongoing research by Roger Grabowski (Kroll) and Dr. Ashok Abbott (West Virginia University) supports the use of different long-term growth rates for different industries and the use of the three-stage DCF.
BV News and Trends November 2023
A monthly roundup of key developments of interest to business valuation experts.
New Book Offers Template for Assessing ESG Impact on Firm Value
Based on some case studies, a new book includes a template that summarizes steps in assessing whether ESG factors are material enough to integrate into a valuation. The book is Valuation and Sustainability—A Guide to Include Environmental, Social, and Governance Data in Business Valuation, edited by Dejan Glavas (ESSCA, School of Management, Boulogne-Billancourt, France), who also wrote several chapters.
Firms with better ESG ratings yield higher returns, per Kroll study
Companies with better environmental, social, and governance (ESG) ratings generally outperformed those with lower ratings over the 2013-to-2021 period, according to Kroll’s new ESG and Global Investor Returns Study.
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.
Global BVU News and Trends August 2023
Business valuation news from a global perspective.
Cost of Capital and Inflation Considerations
Inflationary times present unique challenges for businesses, investors, and valuation professionals. Understanding how inflation impacts the various methodologies as part of the valuation analysis and cost of capital components provides necessary insights into its impact on the final valuation. This webinar will also examine how inflation can affect various industries in distinctive ways and whether the purpose of valuation influences such analysis.
Adjusting WACC for ESG: ±100 basis points proposed
When assessing environmental, social, and governance (ESG) factors on valuation, unless there is an impact to cash flow, risk, or growth, ESG has no effect on business value.
Chancery Court Determines Value of Shares by Applying Average of GPCM and DCF Methodologies
In a long and complex opinion, the Delaware Court of Chancery determined the value per share of stock in a former stockholder’s appraisal action. The per-share value was reached by ascribing equal weight to adjusted versions of the comparable companies analysis (GPCM) the stockholder advanced and the discounted cash flow analysis the company advanced. The other methodologies were rejected. The use of the GPCM represented the first use of that method in some years.