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Power Panel: Trends and Issues in Business Valuation

The panel provides an overview of some of the hottest topics in the business valuation profession. Among the topics are: artificial intelligence; environmental, social, and governance (ESG); Department of Labor adequate compensation (ESOP) update; Daubert challenges; federal rules applicable to valuation/litigation experts; interesting case decisions/case law update; market multiples and trends in M discount for lack of marketability—trends and tools; lease accounting and business valuation; trending tax considerations; and cryptocurrency valuation issues. The Power Panel ...

Takeaways from the NYSSCPA valuation conference

BVWire attended last week’s annual New York State Society of CPAs’ Business Valuation and Litigation Services Conference, and—as usual—it was an excellent event.

Sneed v. Sneed

In this North Carolina appellate divorce case, the court affirmed the trial court decisions, including the determination of value of the husband’s law firm interest. The witness for the wife, who was originally a court-appointed expert, testified as to the value of the law practice and included his analysis of personal-versus-entity goodwill. Both courts included all goodwill in the marital estate as per North Carolina case law. The expert witness apparently submitted a calculation of value for his testimony.

North Carolina Court of Appeals Affirms Trial Court as to Inclusion of Personal Goodwill

In this North Carolina appellate divorce case, the court affirmed the trial court decisions, including the determination of value of the husband’s law firm interest. The witness for the wife, who was originally a court-appointed expert, testified as to the value of the law practice and included his analysis of personal-versus-entity goodwill. Both courts included all goodwill in the marital estate as per North Carolina case law. The expert witness apparently submitted a calculation of value for his testimony.

Key Points From the VSCPA Forensic and Valuation Conference

An economic update, a new IRS crackdown, goodwill, reasonable comp, healthcare insights, expert testimony, and options are among the topics recapped from the annual two-day Forensic and Valuation Conference hosted by the Virginia State Society of CPAs.

Calculation report used in court but had no rival

Most valuation analysts will not use a calculation report in court. But what if the other side has nothing?

Active depreciation charged to business owner in divorce

In a South Carolina divorce case, the business owner (husband) appealed the family court’s decision on the valuation of the family business.

Clampitt v. Clampitt

The husband appealed the family court’s valuation of the family business. In a brief opinion, the court of appeals (South Carolina) affirmed the family court’s value because the change in value during the litigation was attributable to the husband, the family court accounted for personal goodwill, and the valuation was within the range of evidence presented.

B.M. v. R.C.

The husband did not engage a valuation of his business, but the wife did. Her valuation expert arrived at a range of values, explaining that he lacked some information and that the information he did have regarding the financial status of the business did not reconcile. As a result, he set a range of values and determined that a range was the most appropriate way to determine the value. The trial court took an average of the range to determine the value for purposes of the marital estate. The supreme court affirmed the lower court decision to average the values.

South Carolina Appeals Court Affirms Value of Family Business—Within Evidence Presented

The husband appealed the family court’s valuation of the family business. In a brief opinion, the court of appeals (South Carolina) affirmed the family court’s value because the change in value during the litigation was attributable to the husband, the family court accounted for personal goodwill, and the valuation was within the range of evidence presented.

The Supreme Court of Alaska Affirms the Use of a Range of Value to Determine the Value of a Business

The husband did not engage a valuation of his business, but the wife did. Her valuation expert arrived at a range of values, explaining that he lacked some information and that the information he did have regarding the financial status of the business did not reconcile. As a result, he set a range of values and determined that a range was the most appropriate way to determine the value. The trial court took an average of the range to determine the value for purposes of the marital estate. The supreme court affirmed the lower court decision to average the values.

Points to know from the VSCPA conference

The annual two-day Forensic and Valuation Conference hosted by the Virginia State Society of CPAs is one event we never miss.

Another case of lopsided valuation experts

A Minnesota divorce case is an example of why judges can get the perception that valuation experts are hired guns.

A Difference of Opinions—Using the Right Tools for the Market Approach

This course will be a hands-on exercise in valuing a small owner-operated business using the market approach. Two appraisers will walk through the valuation of a business with $5 million to $10 million in revenue using the same fundamental financial information but different valuation tools. The results are meant to highlight the differences in value based on a selected market approach and the use of different databases. The training will use multiples derived from private ...

Are you up on the recent BV-related court cases?

One of the highlights of the BVR webinar schedule is the regular update on valuation-related court cases.

Tennebaum v. Deshpande

In this Minnesota appeal of a marital dissolution decree, the district court received valuations from experts representing both parties and determined the value of the husband’s business interest in an asset management company. The husband appealed that value. The district court had considered matters of methodology as well as personal goodwill. The court of appeals found that the district court did not abuse its discretion and affirmed the judgment of the district court.

Valuation of Husband’s Business Interest Considers Credibility, Personal Goodwill, and Other Issues

In this Minnesota appeal of a marital dissolution decree, the district court received valuations from experts representing both parties and determined the value of the husband’s business interest in an asset management company. The husband appealed that value. The district court had considered matters of methodology as well as personal goodwill. The court of appeals found that the district court did not abuse its discretion and affirmed the judgment of the district court.

BV News and Trends June 2023

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

Chalasani v. Bollempalli

In this Arizona appeal of a divorce case, the husband physician did not engage a valuation expert and impeded the discovery of information relevant to the valuation to the wife’s valuation expert. The Appeals Court affirmed the trial court’s decision of value and its apportionment of 50% of the husband’s value in the practice, noting the lack of an expert by the husband and the failure of the husband’s practice to cooperate with the wife’s expert.

Appeals Court Affirms Value of Husband’s Medical Practice—He Fails to Provide Expert Testimony as to the Value

In this Arizona appeal of a divorce case, the husband physician did not engage a valuation expert and impeded the discovery of information relevant to the valuation to the wife’s valuation expert. The Appeals Court affirmed the trial court’s decision of value and its apportionment of 50% of the husband’s value in the practice, noting the lack of an expert by the husband and the failure of the husband’s practice to cooperate with the wife’s expert.

Faulty information slices personal goodwill in two

In a Utah divorce case, both the joint valuation expert and the expert the husband engaged agreed to the amount of personal goodwill in the husband’s consulting business.

Reasonable comp at center of dental practice dispute

In a Massachusetts divorce case, the wife argued that the normalization adjustments to her salary from her dental practice were based on unreliable data.

Rothwell v. Rothwell

In an appeal of a Utah divorce case, the court affirmed the district court’s determination of value of the husband’s businesses. The district court allowed the exclusion of personal goodwill (in accordance with Utah case law Sorensen v. Sorensen) but did not allow the deduction of estimated tax to be paid on a hypothetical sale of the business at some future date.

Utah Appellate Court Excludes Personal Goodwill, Disallows Reduction for Taxes on Hypothetical Sale

In an appeal of a Utah divorce case, the court affirmed the district court’s determination of value of the husband’s businesses. The district court allowed the exclusion of personal goodwill (in accordance with Utah case law Sorensen v. Sorensen) but did not allow the deduction of estimated tax to be paid on a hypothetical sale of the business at some future date.

First issue of Willamette’s Perspectives is released

A new digital publication, Perspectives, which will be a quarterly, has replaced Willamette Management Associates’ Insights publication.

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