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BV News and Trends December 2021

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

Justifying hockey-stick projections

Valuation experts frequently receive from management what may appear to be an unrealistic forecast that starts off modestly but shoots up in future years as if by magic.

BV News and Trends September 2021

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

Examining the ‘Reasonably Objective Basis’ Concept for Projections

Recent developments have raised the bar with respect to how valuation analysts document financial projections and forecasts with regard to a “reasonably objective basis.” But what exactly is this concept and where can analysts look for specific guidance.

Insights and Intel on the Cannabis Industry

Join Ryan Cram and Ron Seigneur for a lively discussion of the current and emerging landscape for business valuation analysts and other professional advisors to the cannabis sector with a focus on the risks and rewards of being involved in the cannabis industry drawing on over 20 combined years of industry experience working marijuana and hemp/CBD clients throughout the country, both large and small. Explore the unique nuances associated with business and intellectual property appraisal ...

BV News and Trends August 2021

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

Embracing the Hockey Stick: Alternative Approaches to Formulating and Assessing Projections

The question of projections may be one of the most challenging elements of a business or intellectual property appraisal. Most business appraisers will be placed in a position of assessing projections, including projections another appraiser provided. Join Michael Blake for an exploration of the quantitative and empirical methodologies for creating and/or validating projections. As a result of this class, you will gain exposure to potentially new tools to help make your projections more robust and ...

ESOP litigation has become ‘risky business,’ says Alerding

As BVWire recently reported, the latest development in the long-running Brundle ESOP litigation is a lawsuit the trustee has filed against the very ESOP appraiser it once had hired to work on the case.

Defining Terms: Forecasts v. Projections—Why Does It Matter?

One area that can trigger some confusion is the difference between the terms “forecast” and “projection.” Some people use them interchangeably, but these are formal terms found in the literature, so they should be used appropriately.

Business Valuation’s ‘Dirty Little Secret’

Recent developments have put the spotlight squarely on projected financial information (PFI). The perception is that too many valuation experts simply accept projections and forecasts they’re given without applying enough scrutiny—or any scrutiny at all. Fortunately, there is some new guidance on how to examine and substantiate PFI you get from management or other third parties in BVR’s new Guide to Management Projections and Business Valuation: Analysis and Case Law. The following is an excerpt from that chapter.

Four questions you must always ask about PFI

There are many things to consider when evaluating prospective financial information (PFI), and much of it can be boiled down to four questions you should be asking, according to the just-released BVR Guide to Management Projections and Business Valuation: Analysis and Case Law.

Another wrinkle in the Brundle ESOP case

Although the district and appellate courts in the landmark Brundle ESOP case ruled years ago against the trustee, Wilmington Trust, litigation related to the case is not over.

Two new resources from BVR

Just released!

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 ...

BV News and Trends May 2021

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

Tax Court issues highly anticipated ruling in Michael Jackson case

In the long-running litigation between the estate of the late megastar Michael Jackson and the Internal Revenue Service, the U.S. Tax Court recently issued its opinion on the value of Jackson’s image and likeness, as well as the value of his interest in two music publishing assets. Overall, this much-anticipated decision is a major win for the Jackson estate. The court’s momentous decision includes an expansive analysis of the rivaling valuation testimony.

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.

Exploring Excel Functions That Help With Business Valuations

Several Microsoft Excel functions are already available in most modern versions of the program that many valuation experts are unaware of. If you use Microsoft Excel for any sort of process, the use of certain functions can make your templates more accurate and allow you to complete an analysis quicker. Join valuation expert and Excel guru Shawn Hyde to learn about setting up dynamic text, which means typing a sentence in a cell in an ...

Global BVU News and Trends March 2021

Business valuation news from a global perspective.

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 ...

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.”

Forecasting: Removing Rose Colored Glasses

Projections are commonly relied on for business valuations, lost profits analyses, reorganization plans, and a host of other projects within litigation. Using forensic accounting analysis, the speaker will address “rose-colored” projections and how to work with them. Expert Josh Shilts will discuss how to increase confidence levels of projections using macro and micro market data along with statistical analysis.

Top Expert Answers for Today’s Tough BV Questions

In BVR’s recent webinar, Power Panel: Live Expert Answers for Today’s Tough BV Questions, experts Jay E. Fishman, Michelle Gallagher, Ken Pia, and Jeffrey Tarbell covered various hot topics that affect the business valuation profession. These questions ranged from the basics, such as “What will 2021 look like?” to “What are your thoughts on the current state of the ESOP litigation environment particularly with the new administration coming in?” Here, we summarize five of the questions and answers. For more information, be sure to check out the complete recording and transcript of the session.

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