Mandate Survives as a Tax. Limits on How Widely Feds Can Control States Medicare. No Other Limits. Brent Kendall, Louise Radnofsky, and Jess Bravin of the Wall Street Journal report the news:
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Bankers Say M&A ‘Good for Good Companies’ Which Can Often be Sold for 9-10x Earnings Luisa Beltran at PE Hub wonders: “Is there an M&A slowdown?”
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At issue in Gross v. Commissioner is whether the petitioner made an indirect gift of public company stock to her daughters, thus negating any discounts for lack of control or marketability. Judge Halpern at the Tax Court ruled that the step transaction was not applicable and that a 35% discount was justified. Find out why.
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The Financial Professional’s Guide to Healthcare Reform; Accountants’ Handbook, 12th Edition New titles from Wiley this summer include Scott Miller on Buyouts, Dietrich and Anderson’s thorough Financial Professional’s Guide to Healthcare Reform, Roman Weil et al. on Litigation Services and the Financial Expert, and Graham and Carmichael’s Accountants’ Handbook, 12th Edition.
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Why The Black-Scholes Model Overvalues Conversion Options. The Black-Scholes method was the predominant model for many years, and was even endorsed by accounting rules prior to the introduction of FAS 157, even though it was never intended to be used for valuing complex securities or illiquid assets. Some have substituted lattice models or Monte Carlo simulation, making modifications or adjustment to attempt to compensate for illiquidity.
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How to graphically illustrate ratio analysis as a way to enhance and simplify summary findings. A key to providing clients with effective valuation reports—and persuading jurors as an expert witness—is the ability to provide quantitative analysis in a compelling visual fashion. Here, Greg Gadawski and Darrell Dorrell provide an example of how to graphically illustrate ratio analysis as a way to enhance and simplify summary findings.
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An Introduction for Wealth Managers and Business Owners to the Concept of Managing Pre-Liquid Wealth What is the solution to financing the expenditures necessary to manage the wealth that is tied up in closely held businesses? The solution is so obvious that we overlook it, thinking that such activities either are too expensive, too time-consuming, or worse, not a high priority. For owners of closely held businesses, the solution lies in the decision to treat their ownership interests as an investment. This book introduces the concept of the One Percent Solution – a new and powerful way to manage all…
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Uncertainty Surrounding the Court’s Pending Decision Causes Transaction Delay Private Equity International’s Graham Winfrey reports that whatever way the Supreme Court rules on healthcare may end up driving more industry activity.
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Are Deficiencies More Common? Or is it Simply that PCAOB Now Successfully Targets Audit Areas Prone to Problems? Emily Chasan at the Wall Street Jurnal’s CFO Report delivers the news that The Public Company Accounting Oversight Board has been catching an increased number of audit errors around fair value measurement this year, says PCAOB member Lewis Ferguson. He notes that audit regulators around the world have been finding issues with fair value measurement as well as auditor independence and going concern opinions.
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The New York Times’ Dealbook reports that after putting banks on watch four months ago, Moody’s Investors Service on Thursday cut the credit ratings of 15 large financial firms, in a move that could do lasting damage to their bottom lines and weigh on the markets.
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Emily Chasan at the Wall Street Journal’s CFO Journal reports that the chairman of the International Accounting Standards Board said Wednesday that he expects the board, which sets accounting rules for over 100 countries, will focus on clarifying some of its most confusing accounting standards once it completes its key convergence projects with U.S. accounting rule makers.
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How to Arrive at an Appropriate Fair Market Price for a Medical Practice When valuing a medical practice, how do you determine fair market value in light of recent Stark II regulations? Some of it depends on the definition of the term “commercially reasonable.” And a lot also depends on accurate assessment of future revenues, as well as expense assumptions. Here’s a guide to what to keep an eye on as you navigate this territory.
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Caveats that Careful Valuators and Consultants to Keep in Mind When Using the Market Approach to Valuation Authoritative sources such as the IRS, SEC, FASB, and professional appraisal associations consistently advocate market prices to be the best indications of value. But is that always true? Gregory R. Marsh argues that in some financial markets—at various times—there’s plenty of evidence that both buyers and sellers are either illogical or relying on uninformed guesses. Moreover, even if one grants that a market price is highly probable? That price can become irrelevant if a highly-leveraged company cannot secure additional or replacement financing before…
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Biotechnology Valuation: An Introductory Guide Biotechnology is producing quantum advances in medicine, but the specter of unforeseen consequences from treatments has brought with it a parallel growth in litigation. Valuing biotechnology assets isn’t easy: generally accepted methods of discounted cash flows (DCF) and market comparison are sometimes difficult to apply in an industry rife with low probabilities of success, variable marketability, and patent lives shortened by the drug development and regulatory process. Karl D. Keegan’s Biotechnology Valuation: An Introductory Guide helps consultants navigate this growing field. Lari Masten reviews.
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Most consultants, business owners, and attorneys understand that a good expert witness needs to meet core criteria of giving an independent opinion, being able to support that opinion under a vigorous cross examination, and communicate with and persuade a jury. But what else is important? Joe Epps explains.
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Main Street Businesses: Smart Strategies for Exit Plan Main Street businesses are those with less than $3 million in annual sales and less than 20 employees. While Main Street businesses are the backbone of the U.S. economy, the U.S. Small Business Administration reports that four out of five of these businesses liquidate when the owner decides to retire rather than ending in a profitable sale to a new owner.
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Smart Consultants Use Benchmarks to Add Insight and Increase Profits Business valuation professionals constantly use benchmarking tools to evaluate businesses that we determine values for—but we aren’t always as diligent in using benchmarking tools to evaluate and to manage our own consulting businesses. Dave Cooper explains why this should be a priority.
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Be Careful When Using EBITDA for the Terminal Valuation Calculation If you’re going to construct consistent valuations, use earnings instead of cash flows in your calculations. Why is it important to be consistent? Because you have to calculate a discount rate based on one or the other. Richard Claywell explains.
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Jon Hilsenrath at the WSJ’s Real Time Economics blog captures some interesting tidbits from Federal Reserve Chairman Ben Bernanke‘s testimony which go beyond the big question of whether the Fed will try to ease financial conditions again:
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Terri Eyden at AccountingWeb analyzes new research from the American Accounting Association and finds that M&A restatements are common. Excerpt: