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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®).

The Power of Artificial Intelligence and Machine Learning

in Business Valuations The advent of ChatGPT and its other AI apps has come to the forefront. This is potentially disruptive technology that will raise uncomfortable issues, but also open the door to innovation and new industries. AI will impact how business valuations are performed and the role of accredited professionals. This article discusses how AI and machine learning could impact the business valuati ...

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The Future of the Business Valuation Profession

(Part IV) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. ...

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The Well-Written Business Valuation Report

Structured, Clear, and Well-Researched and Reasoned In a litigation setting, a well-written business valuation report can position your conclusion of value as credible. When completed for tax purposes, a well-written business valuation report can help avoid an IRS challenge. In any circumstances, a well-written business valuation report can provide the business owner with ways to increase cash flow and redu ...

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A Contrarian View to Discount for Lack of Control

The “Least Bad” Method Determining a discount for lack of control (DLOC) is one of the more challenging tasks facing business valuators. The reason for this is the methodologies used each have weaknesses. In this article, David Goodman looks at two methods and explains the difficulties in relying on them. This is a case where business appraisers may need to rely on the “least bad” method … a term of art. De ...

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Company Specific Risk Premia

Tests of Reasonableness Business appraisers use tests that ask whether decisions made are legitimate and designed to remedy a certain issue under the circumstances. These tests are commonly referred to in the valuation literature as tests of reasonableness. Several methods have been suggested and employed (e.g., purchase justification test), but limited literature speaks to the use of a test of reasonablene ...

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The Future of the Business Valuation Profession

(Part III) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. ...

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Nailing Down the Numerator in the DCF Method

Theory to Practice VPS StraightTalk Webinar, June 15, 2023 This article summarizes key takeaways from the June 15, 2023, VPS StraightTalk Webinar presentation co-led by R. James Alerding, CPA, ABV and Carli D. Lehr, CPA, CVA, CSEP. The speakers discussed how to differentiate between a projection and forecast, the importance of developing a reliable cash flow or projection evaluation of specific risk to the ...

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Why Does “Known or Knowable” Matter in Valuation?

The Use of Hypotheticals to Illustrate What Is Known or Knowable In valuation, the concept of “known or knowable” refers to events or circumstances that are (or are not) known or able to be known as of a specific date. This concept is important in the valuation process because every valuation is performed as of a particular point in time, which is referred to as the valuation date. Because the valuation pro ...

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Unimpeachable Diagnosis

An Unimpeachable Cure for Delusive Exactness This 15th article of the unimpeachable neutrality series discusses the pathology, symptoms, and treatment for a bad case of delusive exactness. Delusive exactness affects thousands of financial experts every day and can be fatal to a case if left untreated. On balance, delusive exactness, as described herein, refers to the testimonial delirium exhibited by a fina ...

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Planning for Golden Parachute Payments

A Primer on the Tax Law Issues Years ago, “golden parachute” payments were fully tax deductible by the employer if they were “ordinary and necessary” business expenses under Internal Revenue Code § 162. However, due to controversy over large executive pay packages, the Tax Reform Act of 1984 added § 280G to the Internal Revenue Code. This article discusses planning and tax deductibility issues under the cur ...

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The Future of the Business Valuation Profession

(Part II) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. ...

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The Collaborative Process

An Option to Full-Blown Litigation This article is the first of a multi-part series wherein I will provide the broad strokes of the Collaborative Process and continue with examples of engagements wherein the process has been used (both successfully and unsuccessfully). For the first two years of my practice (2013 through 2015), I worked almost exclusively in pre-nuptial agreements and divorce, mostly in bus ...

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Revenue Drivers and KPIs in the Realm of Business Valuation

A Deeper Inquiry to Better Understand Risk and Performance Key performance indicators (KPIs) can provide business valuation better insight regarding the risk profile of the company, revenue drivers, forecasts, and performance of management in the market served. In this article, the author provides insight regarding what metrics are potentially available to better understand a firm that is being valued. When ...

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Economic Obsolescence Measurement Best Practices

(Part IV of IV) Analysts often apply the cost approach to value special-purpose property. And the measurement of economic obsolescence is an important but often controversial procedure in such cost approach analyses. Part one of this four-part series considered economic obsolescence concepts. Part two discussed the generally accepted measurement methods. Part three recommended responses to the most typical ...

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The Future of the Business Valuation Profession

To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set ...

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Economic Obsolescence Measurement Best Practices

(Part III of IV) Part one of this four-part series discussed the unit principle of property appraisal. Part two discussed the methods of economic obsolescence measurement. This third part recommends best practices responses to the most typical assessment authority objections for economic obsolescence measurements. Introduction Valuation analysts (“analysts”) are often asked to develop value for complex indu ...

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Economic Obsolescence Measurement Best Practices

(Part II of IV) The first of this four-part series considered the differences between the unit principle of property appraisal and the summation principle of property appraisal. This second part describes and illustrates the generally accepted economic obsolescence measurement methods (with particular emphasis on the capitalization of income loss method). Introduction Valuation analysis (“analysts”) are oft ...

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Economic Obsolescence Measurement Best Practices

(Part I of IV) Valuation analysts (“analysts”) are often asked to value special-purpose industrial and commercial property. These analyses may be developed for various purposes, including taxation purposes. This discussion focuses on the identification and measurement of economic obsolescence in the application of the cost approach to value such special-purpose property. This topic is particularly relevant ...

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Unimpeachable Scope

A Synopsis of Valuation Brief 1 “Understanding the Differences: Conclusion of Value vs. Value Calculations” Valuation Brief 1, “Understanding the Differences: Conclusion of Value vs. Value Calculations” attempts to unpack the differences between that which is a conclusion of value and that which is not. In this 14th article of the unimpeachable neutrality series, the author provides a synopsis of the key ta ...

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The Criticism of the Guideline Private Comparable Transaction Method

Tread Carefully Using this Market-Approach In valuation theory, the market-based approach, being one of the three main valuation approaches, can rely on the guideline private comparable transactions method, suggesting that the results obtained in that way should be treated equally with other valuation approaches and methods. However, the disadvantages of the guideline private comparable transactions method ...

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