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New Case Points Up Opportunity for Buy-Sell Valuations

A recent court case illustrates that many buy-sell agreements do not adequately address the issue of valuation when an owner exits the firm. This represents an opportunity for valuation experts to review clients’ buy-sell agreements to identify potential problems, which could mean recurring business for the practice.

New Version of the NICE DLOM Method Now Freely Available

William Frazier (Weaver) has a new version of his nonmarketable investment company evaluation (NICE) method for estimating a discount for lack of marketability (DLOM). An Excel template for the revised version, aptly named NICE-R, is now available.

BV News and Trends January 2021

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

Appeals court OKs one discount, KOs another in divorce matter

In a California divorce matter, the husband’s expert applied two discounts to the valuation of the wife’s one-half interest in his business: one discount for possible future taxes and one for a discount for lack of marketability (DLOM).

New case points up valuation perils in buy-sell agreements

From a valuation standpoint, the lack of a buy-sell agreement—or one with a valuation provision that’s poorly drafted—can result in costly litigation and a painful falling out between business partners and/or family members.

Updated ‘Stout Restricted Stock Study Companion Guide’ available

The most widely used restricted stock transaction database for providing empirical support for a discount for lack of marketability (DLOM) is the Stout Restricted Stock Study (formerly FMV Opinions).

Business Valuation Update Yearbook, 2022 Edition

January 2022 PDF, Softcover (454 pages)

BVR (editor)

Business Valuation Resources, LLC

A new year means another annual “greatest hits” publication!  The Business Valuation Update Yearbook 2022 covers the previous year’s most groundbreaking and thought-provoking advancements in valuation.  It captures changes in regulations and professional standards, key takeaways from professional conferences, and tactical practice-building ideas. This critical desktop reference puts you ahead of the competition with on-the-ground reporting by the BVR editorial team including an Introduction by Andy Dzamba, BVR Executive Editor and insights from notable BV experts.  Learn more >>

BV News and Trends December 2021

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

Updated NICE DLOM model available for free download

During a recent BVR webinar, Will Frazier (Weaver) did a demo of the revised version of his nonmarketable investment company evaluation (NICE) method for estimating a discount for lack of marketability (DLOM).

In a Divorce Case, the California Court of Appeal Rejects Discount for Taxes Not Immediate and Specific But Allows a DLOM

In this divorce case, on appeal, the California appellate court rejected a discount for taxes not immediate and specific and allowed a DLOM regarding the value of the wife’s one-half interest in the jointly owned business. The court also determined that “the [trial] court impliedly made the factual findings necessary to support its ruling regarding Cynthia’s breach of fiduciary duty claim.” Finally, the appeals court determined that the trial court had the authority to set its own terms for payment of the equalization amount to the wife.

Harvey v. Harvey (In re Michael S.)

In this divorce case, on appeal, the California appellate court rejected a discount for taxes not immediate and specific and allowed a DLOM regarding the value of the wife’s one-half interest in the jointly owned business. The court also determined that “the [trial] court impliedly made the factual findings necessary to support its ruling regarding Cynthia’s breach of fiduciary duty claim.” Finally, the appeals court determined that the trial court had the authority to set its own terms for payment of the equalization amount to the wife.

BV News and Trends November 2021

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

Valuing Marketable Securities Portfolios

Given the expected reduction in the estate tax exemption, the use of privately-held marketable equity securities (MES) portfolios as a wealth transfer vehicle is likely to increase. Join Gary Gerlach to learn the ins and outs of valuing these investment vehicles. We will cover the use of multiple (free) sources of closed-end mutual fund (CEF) data and discounts and analyze and select guideline CEFs, focusing on metrics such as asset type, concentration and allocation issues ...

Letter sent to Congress regarding valuation discounts

The American Society of Appraisers and over 100 other business groups and organizations sent a letter to Rep. Neal (D-Mass.) and Rep. Wyden (D-Ore.) urging exclusion of any tax proposals that would impact family businesses and farms, such as eliminating discounts for lack of control or marketability.

IRS sending agents to NACVA’s BV training

The IRS is sending 79 agents to business valuation training provided by the National Association of Certified Valuators and Analysts (NACVA), according to former IRS manager Michael Gregory (Michael Gregory Consulting LLC).

BV News and Trends October 2021

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

Latest issue of the ASA BVReview now in BVRPro

The BVResearch Pro platform contains the full archive of BVReview (going back to 1982!), the business valuation journal of the American Society of Appraisers.

Book Review: Business Valuation: An Integrated Theory (BVIT)

Today, there are many fine business valuation textbooks available to the professional business appraiser for guidance and support. The purpose of these publications is to equip the readers with the methodology, techniques and models necessary to produce a credible valuation opinion and report.

A Current View of the Restricted Stock Studies and Restricted Stock Discounts

Although there is relevant evidence in some restricted stock studies that can be helpful for marketability discount determinations, comparisons with average discount observations from these studies do not provide a meaningful methodology to estimate marketability discounts. We conclude this despite the fact that too many valuation analysts continue to rely on simplistic comparisons with averages of restricted stock discounts from dated studies in their marketability discount determinations.

Red Flags Appear in BVR’s DLOM Survey Results

There are a number of areas of concern in the responses to BVR’s recent survey on methodology and practice for estimating a discount for lack of marketability (DLOM).

2021 Johnson/Park DLOM study is now available

The Johnson/Park empirical method to estimate a discount for lack of marketability (DLOM) is one of the most popular methods business appraisers use for this purpose, according to a recent BVR survey.

2021 Discount for Lack of Marketability Study

September 2021 PDF

Bruce A. Johnson, James R. Park

Johnson/Park

The 2021 Discount for Lack of Marketability Study provides objective rate of return measures to implement the Johnson/Park Empirical Method for determining a discount for lack of marketability (DLOM) for the valuation of interests in privately held corporations and partnerships.  Learn more >>

BVR’s Discount for Lack of Marketability Survey: Results Show Some Red Flags to Watch For

BVR’s recent survey on methodology and practice for estimating a discount for lack of marketability (DLOM) garnered over 200 responses. After analyzing the results, we identified several red flags that were worthy of further exploration. Read on to learn more!

Expelled partner should get FMV—but of what?

An Oregon appellate case deals with compensation for a partner’s 25% interest in a business after he is expelled from the firm.

Mercer chimes in on BVR DLOM survey

“Our profession has a long way to go in terms of understanding what DLOMs, or marketability discounts, really are,” concludes Chris Mercer (Mercer Capital) in his analysis of BVR’s 2021 DLOM survey.

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