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The National Association of Certified Valuators and Analysts® (NACVA®) has been educating and credentialing CPAs and other financial advisors to support business owners in understanding the value of their business for the past quarter century. NACVA’s  global Certified Valuation Analyst® (CVA®) designation is the most widely recognized valuation credential and the only business valuation credential accredited by the National Commission for Certifying Agencies® (NCCA®).

Considerations in the Valuation of Alternative Asset Management Firms and Carried Interest

Issues in Hedge Fund Valuations The proliferation of hedge funds presents an opportunity for valuation analysts. In this article, the author provides an overview of the hedge fund industry, compares the manner in which hedge funds operate vis-à-vis private equity and venture capital, and outlines the opportunities and challenges for valuation analysts interested in serving this market sector. ...

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Three Common Roles for Financial Experts

In Chapter 11 Bankruptcies, Part 2 Financial experts may be called on to provide a number of services in Chapter 11 bankruptcy cases. Common among these services is the analysis of the interest rate to be paid on secured claims, the valuing of the bankrupt business or a portion of the bankrupt estate, and the creation or analysis of cash flow projections to assist in determining the feasibility of the reorg ...

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Valuation of Hospital System Targets

Insights from the Analysis of Mega Transactions By scrutinizing data from large transactions, valuation experts can glean important information and insights into current healthcare valuations. In this article, Collin McDermott and Bridget Triepke summarize SEC filings, review the implied valuation of large healthcare mergers—based on the purchase price—and provide a detailed review of the fairness opinions ...

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Three Common Roles for Financial Experts

In Chapter 11 Bankruptcies, Part 1 of 2 Financial experts may be called on to provide a number of services in Chapter 11 bankruptcy cases. Common among these services is the analysis of the interest rate to be paid on secured claims, the valuing of the bankrupt business or a portion of the bankrupt estate, and the creation or analysis of cash flow projections to assist in determining the feasibility of the ...

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Strategy and Equity Value

Never Mutually Exclusive Strategy has many meanings. Implementing a strategy that adds shareholder value and factors in changing market dynamics is the best strategy. In this article, Carl Sheeler shares his views on “trusted advisors” and how these trusted advisors often do not have the depth or experience to assist clients in devising a strategy that will increase shareholder value. The article suggests t ...

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Private Company Performance Posts Third Straight Increase

According to Accounting Today, performance for private companies increased for the third straight quarter. Based on a report by Sageworks, sales for private companies grew an average of 8.6 percent in the past year, yielding an increase in net profit margins of nearly 7 percent. Among the industries seeing the highest increases were law firms and medical practices. The report also identified the 10 industri ...

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Estate of Elkins

Fifth Circuit Reverses the U.S. Tax Court and Upholds the Fractional-Ownership Discount The Fifth Circuit reversed the U.S. Tax Court recognizing the fractional-ownership discount advanced by the Estate of Elkins and awarding the Elkins family a $14.4 million estate tax refund. Joseph Brophy explores the recent ruling. ...

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Koons v. Commissioner

Key Issues For all of Mr. Koons’ careful estate planning, involving a significant sale and redemption transaction of business operations to provide liquidity and flexibility in his later years, the planning was disrupted by an untimely death—Mr. Koons’. The disruption here highlights the importance of starting early with business valuation input to help avoid a complex confluence of strategic transactions w ...

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Use of Pratt’s Stats Transactional Data

Issues and Opportunities This article discusses some of the issues in using the Pratt’s Stats transaction data, which can be used to develop multiples in a Market Approach or to develop a private market discount rate used in an Income Approach. The information presented is relevant to both business brokers/intermediaries and business appraisers. ...

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Developing Supportable Attrition Rates in Customer Relationship Valuations

Valuation of the Customer Base The value of the customer base is a function of attribution. Measuring percentage attribution requires access to internal data, and this data is often missing. Where it is available, the valuation professional can use the Constant Revenue or Revenue Decline Model. This article explains how these models are developed. ...

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Considering the Subject Industry in the Discounted Cash Flow

Method for dissenting shareholder appraisal actions The consideration of the subject company’s industry (the subject industry) when applying the Income Approach—Discounted Cash Flow Method—is an important issue for the valuation analyst, specifically as it relates to shareholder appraisal rights actions. The Delaware Chancery Court regularly provides guidance as to the proper consideration of the subject in ...

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Life and Death: Valuing Life Insurance

This past summer, the firm of Pluris Valuation Advisors LLC released a detailed white paper on the valuation of life insurance. According to the authors, when valuing life insurance or life insurance-linked instruments such as split-dollar collateral assignment receivables or split-dollar promissory notes, there are only three elements of Fair Market Value. These include: Illustrations from the insurance co ...

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Calculations and Opinions: Bringing Clarity to a Cloudy Issue

Opinions are like viewpoints; everyone has one Opinions are often provided in connection with calculation values and a conclusion of value. SSVS No. 1 does not prohibit or explicitly endorse either. In this article, Jim Hitchner shares his views on whether the term “opinion”―offered in a litigation or non-litigation engagement—should be used as part of the engagement or offered in connection with a calculat ...

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