Business Combinations and Fair Value for Financial Reporting
Are you confused by business combinations? Join William Kennedy for this engaging session covering GAAP fair value standards and their application in business combinations. Hear a discussion of the nuances of the GAAP fair value standard and history of how it was developed as part of the GAAP-IFRS convergence project. Also learn how the valuation approaches and methods used in fair value assessment differ from valuation approaches used in a fair market value appraisal.
BVR Briefing - Control Premiums: A Deep Dive into the New Data on Invested Capital Premiums
June 2021 PDF
BVR (editor)
Business Valuation Resources, LLC
Comparing Growth Rates Used in Discounted Cash Flow Valuations
Estimating growth in net cash flows is one of the key components in applying the discounted cash flow (DCF) method in valuing any company, reporting unit, or other business unit. This paper explains the underlying assumptions of the DCF method and demonstrates how to compare the most commonly used basis for estimating net cash flows (sometimes referred to as free cash flows), expected organic growth, to historic estimates of growth of the subject company and ...
Recent Developments in Delaware Valuation Cases
This article discusses current developments in Delaware case law as they relate to valuation. It reviews all relevant Delaware Supreme Court decisions since 2017 and all relevant Court of Chancery decisions since 2019. We discuss the emphasis being placed by the Delaware courts on using discounted cash flow for valuations in related party transactions, as well as the substantial reliance on transaction price as the valuation measure in arm's-length transactions that have a satisfactory negotiation ...
BV News and Trends May 2021
A monthly roundup of key developments of interest to business valuation experts.
Court of Chancery adopts deal price, adjusting for synergies and tax savings
In a statutory appraisal action, the Delaware Court of Chancery recently adopted the deal price minus synergies as the best indicator of fair value.
In re Appraisal of Regal Entertainment Group
In a merger action involving a publicly traded company, dissenting shareholders sued for a higher value than the deal consideration. Under the applicable appraisal jurisprudence, the court calculates fair value using the deal price minus synergies and adjusting for the change in value of the target between the signing and closing of the transaction.
In Appraisal Action, Court Determines Fair Value Using Deal Price Minus Synergies and Adjusting for Increase in Value From Signing to Closing of Merger
In a merger action involving a publicly traded company, dissenting shareholders sued for a higher value than the deal consideration. Under the applicable appraisal jurisprudence, the court calculates fair value using the deal price minus synergies and adjusting for the change in value of the target between the signing and closing of the transaction.
Estate of Michael J. Jackson v. Commissioner
Tax Court mostly sides with estate of late superstar in valuing three contested assets; assets had to be valued separately, based on parties’ stipulations, and at death; court says Jackson’s “tattered” image and likeness meant he earned little money apart from his music; court rejects tax affecting.
Tax Court Hands Jackson Estate Major Win but Finds Reasoning for Tax Affecting Unpersuasive
Tax Court mostly sides with estate of late superstar in valuing three contested assets; assets had to be valued separately, based on parties’ stipulations, and at death; court says Jackson’s “tattered” image and likeness meant he earned little money apart from his music; court rejects tax affecting.
Valuing Shareholder Cash Flows
The integrated theory of business valuation provides a conceptual framework for disciplined analysis of valuation questions. Too often, valuation analysts are tempted to view individual components of a valuation assignment on a piecemeal basis. Adhering to the integrated theory helps valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest. In the first webinar of the three-part series, Chris Mercer ...
New evolving ESOP case raises familiar valuation-related issues
A new ESOP litigation is underway in federal district court related to a 2011 transaction in which the majority owner of the company sold his remaining stock to the company’s ESOP.
Evaluating and Applying Control Premiums
In recent years, a greater amount of scrutiny has been placed on valuation analysts’ selection and use of control premiums. As a result, there has been a renewed interest in distinguishing acquisition premiums from control premiums and equity premiums from invested capital premiums. Join Timothy Meinhart for a comprehensive discussion of the proper quantification and application of acquisition premiums and control premiums and also learn about the benefits of using market-based invested capital premiums rather ...
Ryan Trust v. Ryan
In family buyout dispute, state high court affirms trial court’s decision to adopt expert valuation testimony for selling majority shareholder, finding expert’s DCF inputs were reasonable as was selection of multiple of earnings in GPTC analysis; expert’s explanation for S corp premium was convincing.
State Supreme Court Affirms Adoption of Selling Shareholder’s Expert Value Findings
In family buyout dispute, state high court affirms trial court’s decision to adopt expert valuation testimony for selling majority shareholder, finding expert’s DCF inputs were reasonable as was selection of multiple of earnings in GPTC analysis; expert’s explanation for S corp premium was convincing.
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.
Valuing Enterprise Cash Flows
The integrated theory of business valuation provides a conceptual framework for disciplined analysis of valuation questions. Too often, valuation analysts are tempted to view individual components of a valuation assignment on a piecemeal basis. Adhering to the integrated theory helps valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest. In Part 1 of the series, Chris Mercer and Travis ...
Valuing Small and Micro Businesses Using the Income Method
Focus in on valuing micro and small businesses using the income methods of business valuation. Learn to distinguish differing risk factors between large companies and micro and very small companies. Join Gregory Caruso for a deep dive into problematic areas of actual small-business valuation cases to review theory and tie it into the actual application of methods using best practices and professional judgment. Audience questions and succinct opinions welcomed in this hands-on event.
Blast from the past on forecasting
During a recent BVR webinar, Josh Shilts (Shilts CPA PLLC) mentioned a helpful article that appeared in the Harvard Business Review (HBR), “How to Choose the Right Forecasting Technique.”
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.