On Improving Estimation of Co-Movements in Stochastically Correlated Inputs in Monte Carlo Simulations
This article introduces the use of the Gerber statistic when performing a Monte Carlo simulation for cases when two or more random inputs are correlated. When interdependent random variables violate certain standard assumptions required for use of the traditional historical Pearson correlation matrix, the Gerber statistic can provide a better estimate of correlation and, consequently, of the value of the subject asset. This article examines the strengths and weakness of the Gerber method relative to ...
BV News and Trends November 2023
A monthly roundup of key developments of interest to business valuation experts.
VRC named M&A valuation firm of the year
Valuation Research Corp. (VRC) has been named Valuation Firm of the Year in M&A Advisor’s 14th Annual International M&A Awards.
What Would a Hypothetical Willing Seller Do? A Complicated Case—A Confounding Decision in Idaho
An inside look by one of the experts in a case that “had it all”: a high-tech startup, a recent historical transaction, the personal goodwill-versus-commercial goodwill debate, a covenant not to compete, a lot of money at stake, and the proverbial “battle of the experts.”
'Confounding incongruities' in recent divorce case
A complex divorce case in Idaho included a number of valuation issues, one of which was the personal vs. enterprise goodwill question.
Lamm v. Preston
This was a divorce case with a complex set of issues regarding the marital estate and the businesses of the parties. This Supreme Court of Idaho case and opinion related to one of the businesses, Black Sage Acquisition LLC, in which the couple owned 25%. The magistrate court determined the value of Black Sage Acquisition as $163,373 based on fair market value. The remaining value was determined to be personal goodwill. The Supreme Court (Idaho) affirmed the decision of the district court, which upheld the magistrate court.
Idaho Supreme Court Affirms Magistrate Judge’s Opinion Regarding Personal Goodwill
This was a divorce case with a complex set of issues regarding the marital estate and the businesses of the parties. This Supreme Court of Idaho case and opinion related to one of the businesses, Black Sage Acquisition LLC, in which the couple owned 25%. The magistrate court determined the value of Black Sage Acquisition as $163,373 based on fair market value. The remaining value was determined to be personal goodwill. The Supreme Court (Idaho) affirmed the decision of the district court, which upheld the magistrate court.
Highlights From the 2022 NYSSCPA BVLS Conference
Money laundering, earnouts, valuing debt, and SPAC enforcement are a few of the topics presented at the Business Valuation and Litigation Services (BVLS) conference hosted by the New York State Society of CPAs. Here are some key takeaways.
Highlights from the NYSSCPA BV conference
BVWire attended the New York State Society of CPAs’ Business Valuation and Litigation Services Conference, and—as always—it was an excellent event.
Additional Takeaways From the 2021 ASA International Conference
Interesting sessions covering risk-free rates, equity risk premia, expert testimony, appraisal reviews, cannabis valuations, and more from the American Society of Appraisers’ International Conference, held in Las Vegas.
Volatility of Financial Metrics: Important Data for Contingent Consideration Valuations
This article presents the first detailed statistical analysis of the volatilities of various commonly encountered financial metrics used in contingent consideration (and earn-out) agreements. The valuation of contingent consideration using an option-based methodology and non-equity volatilities is becoming more common in business valuation. We provide clear evidence that the volatility of five financial metrics—revenue; earnings before interest, taxes, depreciation, and amortization (EBITDA); EBIT, net income, and total assets—is strongly, negatively related to firm size and ...
BV News and Trends February 2022
A monthly roundup of key developments of interest to business valuation experts.
Vantage Point Advisors named M&A valuation firm of the year
The M&A Advisor named Vantage Point Advisors the 2021 “Valuation Firm of the Year” at its 20th annual M&A Advisor Awards Gala in New York City.
BV News and Trends October 2021
A monthly roundup of key developments of interest to business valuation experts.
Special Purpose Acquisition Companies: Practical Insights for Valuation Professionals
SPACs have become a common vehicle for management to take companies public. The valuation of SPAC shares and warrants often requires the use of more complex statistical techniques such as option pricing models and Monte Carlo simulation and a detailed review of contractual terms in the SPAC prospectus and securities agreements. Join Antonella Puca, who will focus on practical considerations and case studies. This webinar is meant to help you address the special challenges of ...
Earnouts trigger higher returns in M&A deals
Valuation experts who advise in M&A should be interested in a new research paper that examines earnouts.
Monte Carlo 101: How to Set Up Your First Simulation
Join Oksana Westerbeke and Keith Konen to learn the basics of the Monte Carlo simulation. Review the pros and cons of different software used for Monte Carlo simulations. Then dive into the steps to set up your first Monte Carlo simulation with a detailed discussion of the “assumptions” and “forecast” of the Monte Carlo simulation, the analytics and output, and troubleshooting. Learn through the hands-on visual presentation of designing and implementing a Monte Carlo simulation ...
New Study Analyzes Earnout Data in DealStats
What the BVR DealStats database reveals about the nature of earnouts, keeping in mind the fact that the pandemic has affected some industries far greater than a “normal” recession.
American Business Appraisers and BVR Annual Key Issues Update
Every year American Business Appraisers brings together experts from across the country for a frank and practical discussion of the issues impacting business valuation. This year, everyone is invited to four great sessions. Get a current update on the SBA Paycheck Protection Program and the forgiveness application. Adam Rosenfield gives an overview of what the most recent changes to the program are and how that affects clients/future clients. Get guidance on how the loan and ...
Case Studies in Contingent Consideration
A significant component of the transaction price in an M&A or buyout transaction often consists of proceeds that are “contingent” upon the target company’s achievement of certain performance targets after the closing has taken place. From the perspective of the seller, “contingent consideration” represents the right to receive additional assets or equity interests from the buyer (earnout), or the obligation to return part of the proceeds from the transactions (clawback) if specified future events occur ...
Do acquisition earnouts increase business value?
It’s not uncommon that business valuation analysts need to consider the contingent value and costs of earnouts paid to the management of acquired companies.