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BVU News and Trends December 2020

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

Mercer and Harms release new edition of their Integrated Theory book

BVR is pleased to announce that the new third edition of Business Valuation: An Integrated Theory is now available in its bookstore.

Mercer using a 1% COVID-19 risk premium—for now

Veteran business valuer Chris Mercer (Mercer Capital) was a keynote speaker at the New York State Society of CPAs Business Valuation/Litigation Services Conference, which was held online on May 18.

Weinberg v. Commissioner: Good law, bad economics, or both?

Lawyers often comment that good cases make bad law. As an economist, I have a similar comment: good law often comes from bad economics. By definition, a judge’s opinion is good law.

ASA International Appraisal Conference: Winds of Change Part 2 of 2

The ASA International Appraisal Conference held at the Marriott Waterside Hotel & Marina on July 14-16 in Tampa, Florida was anything but business as usual this year.

Lack of marketability discounts suffer more controversial attacks

The apparently well-meaning Drs. John Kania and Mukesh Bajaj are at it again, espousing discounts for lack of marketability for stocks of closely held companies that are a fraction of those encountered in the real world.

FMV to release its restricted stock study

Bringing Sanity to Marketability Discounts: A New Data Source, Espen Robak and Lance S. Hall , Valuation Strategies , July/August 2001, pp. 6-13, 45-46. Over the years, several approaches h ...

QMDM debate continues

The QMDM and Estimating Required Rates of Return for Restricted Stock , Z. Christopher Mercer, ASA, CFA, Business Valuation Review , June 2001, pp. 12-20. The article summarizes the debate be ...

State of the art reference for all discounts and premiums issues

by Rand M. Curtiss, FIBA, MCBA, ASA, ASA, Loveman-Curtiss, Inc. Business Valuation Discounts and Premiums , Shannon P. Pratt, John Wiley & Sons, September 2001. Available from Business V ...

2001 ASA International Appraisal Conference, part 1

The American Society of Appraisers annual multidisciplinary conference was held in Pittsburgh, Pa., July 23-25. The theme of the conference was "Build New Bridges into the Millennium," given that this ...

Engstrom backs his examination of the QMDM

In the March 2001 edition of Shannon Pratts Business Valuation Update , I explained that the Quantitative Marketability Discount Model (QMDM) is heavily influenced by elements of control, s ...

Examination of Mercers QMDM reveals inadvertent error

In this exchange between Eric Engstrom and Chris Mercer, Eric pinpoints an inadvertent error in Mercers "Base Case" for his Quantitative Marketability Discount Model. Erics interpretation wo ...

Mercer responds to Engstrom analysis

The QMDM is offered in the context of what, I believe, is sound financial theory. And that theory is evolving. As indicated in Quantifying Marketability Discounts , the QMDM begins with an ...

Tax Court Considers QMDM and Restricted Stock Studies in Determining Discount for Lack of Marketability

In November 1992, the Petitioners gifted shares of St. Edward Management Co. (the "Company") common stock to their children.

Janda v. Commissioner

In November 1992, the Petitioners gifted shares of St. Edward Management Company (the "Company") common stock to their children. Each gift represented approximately 5.3% of the outstanding shares of common stock. St. Edward Management Co. owned 94.6% of the common stock of the Bank of St. Edward (the Bank), a bank located in a small agricultural community in Nebraska.

Weinberg et al. v. Commissioner - It's not about the Marketability Discount

n Weinberg et al. v. Commissioner – It's Not About the Marketability Discount , Mercer, Z. Christopher E-Law Business Valuation Perspective , 2000-03 and 2000-04, March 13, 2000 In this doub ...

Quantifying marketability discounts

I am in the process of completing my demonstration reports for my CBA. I used a 30% LOM discount after deriving a value for a closely held, small business using the Ibbotson build up method.

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