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The Valuation of Being Bilingual

While most don’t see a benefit to speaking a second language in their personal or professional life, the increasing diversity of large cities and unexpected international elements in business deals is stressing its importance. Even though you may not remember any of your high school Spanish or German, it’s never too late start again, if for no other reason than the financial incentive involved. The Economis ...

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Degree in Deception

Misuse of university endowments and school funding tax dollars Money laundering is usually associated with criminal activity, but that is a narrow view. Money laundering takes many forms. In this article, Professor Larry Crumbley contends that money laundering occurs in multiple instances—from the local school board to the university setting. Learn the keys to identify the misappropriation and misuse of fun ...

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The Importance of Industry Research

Understanding the different aspects of an industry is key to evaluating a company’s future performance Understanding a subject entity’s industry is a hallmark of any good valuation report. Conducting a very detailed and intense industry analysis can provide valuation analysts with specific knowledge needed to determine an appropriate conclusion of value. As a general rule, a company’s performance is commens ...

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Private Equity Capital Tops $1 Trillion for High Price Deals

At the end of 2013, private equity firms were sitting on a cache of at least $1 trillion, according to a report from Bain & Company.  This marks a $159 billion increase from the closeout at the end of 2012.  The expected result of this capital bubble isn’t just more deals, but at much higher valuations, as well.  As Fortune magazine put it, “…the capital tail will wag the deal dog.”  For more informatio ...

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Building Value from the Inside-Out

Maximizing value by minimizing risk Most private company owners are not aware of the impact of company-specific risk on the value of their businesses. When they are faced with a need to increase the value of their businesses in order to close a value gap, they typically only focus on growing sales, reducing costs, or making an acquisition. None of those strategies are the most effective initial way to incre ...

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U.S. Department of Justice Pursues 20K Tax Cheats Shielded by Credit Suisse

You could call it UBS, Part II.  Back in 2009, the U.S. Department of Justice (DOJ) uncovered 4,700 names of American citizens avoiding taxes with the help of Switzerland’s largest bank, UBS.  Most notably, Beanie Babies creator and billionaire, Ty Warner, was caught in the sting that cost UBS $780 million in fines and netted the IRS $6 billion in taxes and fines from a voluntary disclosure program for petr ...

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Big Pharma Megamergers Bad for Management, Good for Shareholders

Pharmaceutical companies that have remained among the world’s top 20 largest have all gone through a megamerger with a $10+ billion target company between 1995 and 2005. That sounds like good news, and it is—for the shareholders. On the flipside, such gargantuan couplings tend to wreak havoc on internal management systems, as well as organizational and critical programs; even research and development suffer ...

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Top Five Things Missed in Valuing Equity in Most Asset Holding Entities

The days of applying Mandelbaum and referencing a few IPO and restricted stock studies are over. This article addresses what is often omitted from most asset holding entity valuation reports. By failing to include issues like the ones outlined, the resulting adjustments are less empirical and more a "guesstimate". Valuation practitioners and their advisory clients have a duty to the users of our reports to ...

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FASB Endorses VIE Alternative for Lease Arrangements

FASB has voted to endorse a GAAP alternative to exempt private company lessees from a requirement to consolidate variable interest entities (VIE) in common control leasing arrangements.  Initiated by the Private Company Council (PCC), the exemption would be allowed under specific conditions including: Private company lessee and the lessor entity are under common control Private company holds a leasing arran ...

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Cannabis Conundrum for Banks

Currently, 20 states and the District of Columbia allow some type of legal marijuana use.  On January 1st of this year, supply shops all across Colorado began selling to the general public (age 21 and over), in accordance with a voter referendum.  Medicinal use bills have been filed or are expected to be introduced in eight additional states, while full legalization bills like that of Colorado have been fil ...

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Valuation of Promissory Notes

It’s not as simple as it seems This article explores the fact that the valuation of a simple debt instrument, such as a promissory note, can be anything but simple. It is observed that the sum of unpaid debt, as well as accrued interest, may well overstate the value of the promissory note. Also covered is whether assets tied to notes need to be valued separately. ...

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Dissecting the Medical Practice Revenue Stream—Part 1

Four things valuators should know about medical claims and coding While all valuators need to be able to cite specific factors considered in the determination of fair market value, many times the measures selected could be applied to a variety of industries. In this first of a two-part series, Jeffry Moffatt examines why revenue is most often a primary area of interest for valuation, because without revenue ...

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