Business Valuation OIV Journal Spring 2019
Business Valuation OIV Journal has been created by Organismo Italiano di Valutazione (OIV), the Italian Valuation Standard Setter, to provide a forum for discussion and to foster cultural progress in the field of business valuation. In this issue, articles include "Company Valuation as Result of Risk Analysis: Replication Approach as an Alternative to the CAPM"; "Residual Income Model and Abnormal Returns: A Comparison to Factor Styles and Sell-Side Analysts"; and "Critical Issues When Valuating Small Businesses".
BVU News and Trends April 2019
A monthly roundup of key developments of interest to business valuation experts.
Damodaran values Lyft ahead of IPO
Check out the spreadsheet Professor Aswath Damodaran (New York University Stern School of Business) used to value Lyft prior to its IPO this past Friday (March 29).
New York Times’ scathing article on appraisers wins Polk Award
In our coverage of the New York Times article on the “friendly” valuations used to increase the fortune President Trump received from his father, we called it “brilliantly written and fascinating.”
Business Valuation Year in Review 2018
The new tax law, lively debates, new guidance, a strong protest, and a simpler approach to estimating cost of capital were just some of the highlights in the business valuation profession during 2018.
2018 Key Business Valuation and Damages Cases
Choices for the most interesting and pivotal court cases of 2018 involving business valuation issues.
Rethinking the Traditional Levels of Value—Continuing the Conversation
While the representation of a hierarchy of value has served generations of business valuers well, it now needs to be reshaped. One concern is that the hierarchy has at its core the concept of the control premium, a concept that has become strained beyond the breaking point.
BVU News and Trends November 2018
A monthly roundup of key developments of interest to business valuation experts.
New York Times serves up scathing look at appraisers in Trump exposé
“Friendly” valuations are the main characters in a brilliantly written and fascinating article in the New York Times about President Trump’s involvement in “dubious tax schemes” and “outright fraud” to increase the fortune he received from his father.
Working capital disputes in M&A transactions
In 2016 and 2017, over 80% of purchase price adjustments in M&A transactions involved working capital adjustments, according to “SRS Acquiom’s 2018 Deal Term Study.”
New research refutes notion of private-company discounts
There is no evidence that unlisted firms sell at discounts compared to listed firms, according to a new paper.
BVU News and Trends May 2018
A monthly roundup of key developments of interest to business valuation experts.
20 Points to Consider for Valuations Under the New Tax Law
Since the Tax Cuts and Jobs Act was enacted, BVR has been gathering opinions and observations from valuation experts about the impacts of the new tax law on valuations. Here's a list of some points to consider that is by no means exhaustive but is a good starting point.
Control premium advisory revisited
A member of the working group involved in the creation of Valuations in Financial Reporting Valuation Advisory 3: The Measurement and Application of Market Participant Acquisition Premiums, issued by The Appraisal Foundation, has written an article that reiterates the findings of the advisory.
Business Valuation Year in Review 2017
It was another eventful year for the business valuation profession, and here’s a wrap-up of notable developments of 2017.
Book Review: Understanding Business Valuation: A Practical Guide to Valuing Small to Medium Sized Businesses, 5th Edition
A valuation expert reviews the newest version of one of the leading business valuation texts, written by Gary Trugman.
Trial court’s IPO valuation in fair value proceeding holds up on appeal
A recent case shows just how difficult it is to value a startup. Here, there was an extra challenge because the subject was a pharmaceutical venture that required years of funding for the development of two drugs working toward FDA approval. The trial court needed to determine the fair value of the plaintiff’s interest prior to the company’s ultimate success.
New edition of Understanding Business Valuation now available
In addition to revisions to existing material and examples, there’s new material on valuing stock options, preferred stock, debt, and startup ventures.
Tax Court's Koons decision withstands appeal: DLOM ruling anchors valuation
The 11th Circuit recently affirmed a four-year-old Tax Court valuation of a revocable trust’s interest in a limited partnership. The linchpin in the valuation was the marketability discount.
Merger valuation disclosures were adequate. Chancery applies business judgment rule to breach of fiduciary duty action
The business judgment rule has featured prominently in a number of recent breach of fiduciary duty cases in front of the Delaware Court of Chancery. Under the rule, the court must not interfere in a transaction if a majority of the minority shareholders approved the deal and the vote was “uncoerced and fully informed.”
Trail income is different from personal goodwill, Tennessee court clarifies
Tennessee does not consider personal goodwill in a solo proprietorship a marital asset. But what about trail income, the money a financial planner makes from managing his or her clients’ funds and portfolios? In Fuller v. Fuller, the owner-spouse argued the goodwill analysis applied to the treatment of trail income as well. The Tennessee Court of Appeals recently disagreed.
What DLOM methods are now used the most?
Is there a consensus yet on the method to use for estimating a discount for lack of marketability (DLOM)? Find out by taking a short survey.
Chancery achieves fair value with three imperfect valuation techniques
The whole is greater than the sum of its parts. Perhaps Chancellor Bouchard thought of Aristotle when he recently ruled in a statutory appraisal action that, even though the results of three common valuation techniques were unreliable indicators of value, in combination they established fair value.
5th Circuit backs district court's fair market value determination in ESOP dispute
The district court's determination of overpayment was a function of the contract price and the stock’s fair market value on each of three transaction dates. For its FMV determination, the court considered the testimony of three noted valuation experts retained by the plaintiffs, the DOL, and the defendants respectively. Different experts used different methods, different assumptions, different estimates, and they reached different conclusions. But they all used multiple approaches to produce several FMV estimates on the transaction dates. To arrive at a final value determination, or range of values, they all averaged or weighted the results.
Court admits expert's anti-'Georgia-Pacific' royalty calculation
There is no absolute requirement to develop a reasonable royalty based on the Georgia-Pacific framework. That's the takeaway from a Daubert ruling in which the court denied the defendant's motion to preclude the testimony of the opposing damages expert, who determined a reasonable royalty based on market data instead of the customary Georgia-Pacific factors.