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“R” You Ready

R Programming and Ivy League Classes—For Free There are a host of excellent statistical and optimization software packages available to valuation analysts and litigation support consultants. They are good, but also expensive. “R” is a programming language and software environment for statistical computing and graphics. The R language is widely used among statisticians and data miners for developing statisti ...

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Common Misconceptions Regarding Healthcare Entity Valuations

Five Remaining Leading Misconceptions (Part II of II) The following discussion summarizes and responds to common misconceptions many analysts have with regard to the valuation of healthcare entity property and/or services transfers. These analyst misconceptions typically involve a misunderstanding of one or more of the relevant regulatory provisions. These analyst misconceptions typically relate to an erron ...

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Common Misconceptions Regarding Healthcare Entity Valuations

Five of the 10 Leading Misconceptions (Part I of II) The following discussion summarizes and responds to common misconceptions that many analysts have with regard to the valuation of healthcare entity property and/or services transfers. These analyst misconceptions typically involve a misunderstanding of one or more of the relevant regulatory provisions. These analyst misconceptions typically relate to an e ...

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Appropriate Use of Extraordinary Assumptions and Hypothetical Conditions

Healthcare Valuation Considerations when Valuing Outpatient Services With healthcare evolving, how can practitioners project the future benefit stream related to outpatient services? In this article, the authors discuss the use of hypothetical and extraordinary assumptions. They argue that use of these assumptions requires careful consideration as they can have a significant effect on value. In addition, th ...

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Kardash v. Commissioner, T.C. Memo. 2015-51

Assessing Solvency, Fraudulent Transfers, and Liability When Distributions are Made to Minority Shareholders The recent U.S. Tax Court case of Kardash v Commissioner, T.C. Memo, 2015–51 provides guidance regarding transferee liability and underscores how valuations are used to determine when and if a subject company is insolvent. The case also summarizes a number of defenses used (and rejected) to counter a ...

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Second Fairness Opinions

Fairness opinions are offered by financial advisors, primarily, investment bankers on behalf of the Board of Directors who rely on them when considering a significant corporate event. The fairness opinion says that the impending transaction is fair from a financial point of view of the subject company’s stakeholders. As Jeff K. Davis, Managing Director of Mercer Capital’s Financial Institutions Group, expla ...

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50 Reasons for a Business Appraisal

Creating Value for Business Owners and Board Members In this article, Edward Mendlowitz, CPA, ABA, CFF. shares his views regarding the importance of having a business valued. He identifies 50 ways that a valuation professional can provide something far more valuable than a number. While the valuation profession is under pressure to reduce costs or prepare a report, the business owner is better served in the ...

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Hospital Valuations–Market Approach

Beware of the Limitations of Hospital Transaction Databases The market approach is one of three established valuation approaches. In this approach the valuation analyst will look for comparable companies. In this article the authors caution against the outright use of databases as a means of developing a Conclusion of Value for a hospital. Independent verification is time-consuming and essential. The author ...

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Eight Ways of Valuing a Family Owned Business

Managing Expectations of Sellers and Buyers Using the Right Standard of Value The author presents eight standards of value that a valuation analyst may need to consider and discuss with a client. Each standard has a different set of rules and the valuations can vary greatly. Valuing a business is an art – not a science – even though careful calculations are made to arrive at an appraisal of the business. Th ...

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Why Quality Matters in Valuation for Equity Compensation Grants

Privately held companies can expect the level of scrutiny over equity compensation-related valuation to increase with the size of the equity compensation grant. Getting the valuation process right the first time for equity compensation grant compliance is always the least expensive route says Sujan Rajbhandary, vice president, and senior member of Mercer Capital’s Financial Reporting Valuation Group. In thi ...

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Experts as “Mouthpieces” Are Not Experts at All

The Importance of Being Truly Independent The rise of Daubert challenges to valuation experts has resulted in more than just the exclusions of valuation experts. When an expert is excluded for "subjective belief" and "unsupported speculation" by the court, a closer examination into such commentary made by courts reveals the increasingly problematic trend of experts failing to perform independent analyses. ...

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Valuation of Contingent Consideration in M&A Transactions

Companies often use contingent consideration when structuring M&A transactions to bridge differing perceptions of value between a buyer and seller, to share risk related to uncertainty of future events, to create an incentive for sellers who will remain active in the business post-acquisition, and other reasons says Lucas M. Parris, a senior member of Mercer Capital’s Financial Reporting Valuation Group ...

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If Valuation Were an Olympic Sport

There are clear signs that the “easy” portfolio valuations that have existed in 2013 and 2014 may be coming to an end in 2015.  Travis W. Harms who leads Mercer Capital’s Financial Reporting Valuation Group, discusses the expansion in multiples and their role in the favorable equity market returns over the past two years.  He also discusses the impact of high-yield credit spreads, the energy sector, and loa ...

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The Imperative of Considering the Concept of Highest and Best Use in Healthcare Valuation (Part 1 of 2)

Traditional valuation methodologies have relied upon the analysis of historical accounting and other data as predictive of future performance and value. However, this may not hold true with every economy, industry, or even every enterprise within an industry, over time. For example, the turbulent status of the healthcare industry over the last five decades, since the passage of Medicare in the 1960s, has in ...

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Intellectual Property Valuation for Bankruptcy Purposes

Part I: Three of the 12 Reasons a Valuation Is Needed in Chapter 7, 9, and 11 This two-part article summarizes the various types of intellectual property that valuation analysts (“analysts”) may encounter within a commercial bankruptcy controversy, lists the generally accepted intellectual property valuation approaches, and presents the reasons why analysts may be asked to value intellectual property within ...

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Fairness Opinions: Evaluating a Buyer’s Shares from the Seller’s Perspective

M&A activity has accelerated substantially in 2014 following the financial crisis.  When an acquisition proposal is being weighed, there needs to be a thorough vetting of the buyer’s shares.  A fairness opinion evaluates the investment merits of the shares before and after a transaction is consummated says Jeff K. Davis, CFA with Mercer Capital.  This article discusses the key questions you need to ask ...

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The Valuation of Trademark-Related Intangible Property

A Primer on the Approaches and Issues Involved in Valuing Trademarks Valuation analysts are often called on to perform valuation, damages, and transfer price analyses of trademark-related intangible property for various purposes. This discussion describes the valuation of trademarks within the context of both financial accounting and income tax accounting (in particular, tax-related intercompany transfer pr ...

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