Business Valuation Update Yearbook, 2022 Edition
January 2022 PDF (454 pages)
BVR (editor)
Business Valuation Resources, LLC
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).
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.
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.
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
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.
Frazier reviews ‘very important’ book on business valuation
A very comprehensive review of an important book is in the Summer 2021 issue of the Business Valuation Review™, published by the American Society of Appraisers.
QMDM increases foothold in DLOM toolbox
Almost a quarter (22%) of valuation analysts polled say they use the quantitative marketability discount model (QMDM) for quantifying a discount for lack of marketability (DLOM).
Three Court Cases You Must Read Before Writing Your Next Valuation Report
Former IRS officials give their insights into the thinking of the IRS on business valuations. This was a session at NACVA’s recent 2021 Business Valuation and Financial Litigation Hybrid and Virtual Super Conference.
The most popular option model for estimating DLOM
Almost half (48%) of respondents to a recent survey say they use option pricing models to estimate a discount for lack of marketability (DLOM), and the Finnerty model is the one most cited, according to BVR’s DLOM survey.
Full results of DLOM survey now available
BVR’s survey on methodology and practice for estimating a discount for lack of marketability (DLOM) garnered over 200 responses.
Ghaidarov Offers a New Framework for DLOM
Ghaidarov, who has published papers related to option price models for estimating a discount for lack of marketability (DLOM), presents a new concept for illiquidity discounts.