40 Percent of the U.S. GDP is in Privately Held Businesses. Here’s What You Need to Understand and Operate in This Market. Performing business valuation and mergers and acquisition work requires understanding a number of core discipline areas. With the expanded understanding of middle market finance, it is helpful to have a roadmap to complete any successful transaction or engagement.  ...

When Planning a Business Sale, Be Sure to Consider Personal Goals, Consistency, Salability, and Tax Implications Solid exit planning ensures that a business will realize top value when the owners are ready to move on.  How can business owners determine which strategies to focus on today to best build long-term growth?  It may depend on which exit option the owner ends up pursuing.  Here are nine options to ...

UConnect v. Facebook Showed How 409A Valuations Can Destroy Value. Here’s What Shareholders and VCs Need to Know—and Some Ideas About How to Better the Situation. Lorenzo Carver previously explained how 409A valuations destroy value for shareholders receiving grants, and provided a case study of how this all played out in UConnect v. Facebook. In this final article in a three-part series, Carver presents us ...

The Risk-Free Rate is the Cornerstone in Finance for Estimating both the Cost of Equity and Debt Capital. In corporate finance and valuation, both academics and practitioners have long used government security (U.S. Treasury Bills and Bond) rates as proxies for risk-free rate of return. How do credit downgrades affect the risk-free rate for private company valuators? Anthony Banks explains. ...

Top Vote-Getters Include Fed Honchos, Private Sector Leaders, and Association Chief  Who’s the most important person in Accounting?  Is it Leslie Seidman (Chairman of the FASB), Hans Hoogervorst (Chairman of the IASB), or Douglas Shulman (Commissioner, IRS)?   Or instead, might it be James Doty (PCAOB Chair), Mary Shapiro (SEC), or even an as-yet-unnamed person—our next president?  Or someone else entirely? ...

Most Business Owners Understand Interim Cash Flows.  But Terminal Cash Flow May Be Most Important: More Detail on Standards of Value.  Lucas M. Parris at Mercer Capital has authored a white paper at Mercer Capital that posted last month titled Understand the Value of an Insurance Brokerage that guides consultants through the process of selling out, selling in [transferring ownership to heirs], putting toget ...

Keys:  Talk to Existing Staff.  Hire a Specialist Attorney.  Don’t Negotiate Directly.  Exercise Care—and Sleep on it Before Signing.  James Doulgeris at Physicians Practice describes a common scenario where physicians agree to a buy out and later come to regret it: ...

Plus:  New Local Case Law in Los Angeles, San Francisco.   Detail on Virginia Occupational License.  Deloitte Tax Alerts notes new case law in Illinois and new local law in San Francisco and Los Angeles.  Also:   More on Virginia's business, professional, and occupational license tax.  ...

Insurers Say Rates Can Surge After Hospitals Buy Private Physician Practices; Medicare Spending Rises, Too    Anne Wilde Matthews at the Wall Street Journal reports that the increased number of physicians going to work for hospitals is actually resulting in higher costs for patients.   Hospitals are acquiring physician practices and integrating them into hospital services, and while the stated goal is to im ...

Keys to Exit Excellence: Act Now, Begin the Grooming Process, Proactively Identify Potential Acquirers, and Create Value in Your Practice    Donald J. Korn writes in The Journal of Accountancy that it's critical to be proactive in building an exit plan.  Here he talks to a number of experts on the topic—including NACVA member Marty Abo, who recently was featured in Smart CEO Magazine—and collects tips on be ...

Successful Exit Key to Current Performance—and Future Sponsorship Opportunities Chris Manderson at PE Hub writes that  in the private equity world today, sponsors’ track records in successfully exiting investments are a major factor in fundraising.  If sponsors cannot exit previous investments and provide returns, they will find it much more difficult to raise subsequent funds: ...

Learn How the Pros Take Down an Embezzlement Scheme and Gather Tips on How to Best Defend Your Own Practice. Mark S. Warshavsky reviews Stephen Pedneault’s Anatomy of A Fraud Investigation. The book combines a step-by-step recounting of best practices with real-life drama as investigators discover, investigate, and resolve a fraud incident—a fantastic guide to how to defend against and uncover fraud. ...

Taxes on S-Corporations are Hotly Discussed by Legislators and May Change. Here’s the History, Standing Precedents, and Current Law. S Corporations have been much in the news lately, as we’ve noted on the QuickRead blog. In this piece, Peter Agrapides provides a comprehensive chronological account of valuation cases where the issue of tax affecting S-Corporations has taken center stage. ...

The Winklevoss Twins Realized Too Late the Value They’d Agreed to for Their Common Shares of Facebook. Here’s How it Played Out. Last week Lorenzo Carver introduced the topic of how 409A valuations destroy value for some shareholders.  Today’s piece is a case study in how a wide disparity in value estimates largely created by the 409A process played out in the UConnect v. Facebook lawsuit. ...

Authors of New Book Describe How Ability to Bring in New, High-Quality, Well-Paying Clients Consistently is Key   Bruce H. Rogers and Russ Alan Prince are the co-authors of the just published book Profitable Brilliance: How Professional Service Firms Become Thought Leaders.  At Forbes, the authors detail how a strong referral strategy is critical to a profitable, growing business, and that one of the best w ...

Why Choosing Good Counsel to Help with Exit Planning Can Be the Most Important Decision a Business Owner Makes Venture Resources believes many business owners don’t fully appreciate the complexities and factors that are present in the deal structuring and business selling process, including understanding how to project the company’s future, applying alternate deal structures, and maximizing current business ...

Good Mentors Not Only Catch Errors, but Speed Professional Development, Provide Perspective, and Help Build Your Company Brand The mentoring process is invaluable, explains Baria Jaroudi. That’s not simply because it provides a proofread and detail check, or even because it strengthens professional development and solicits team expertise and new perspectives. Perhaps most importantly, strong mentoring helps ...

Why Built-up Volatility Rates Produce Better Value Indications In part one of a three-part series, Lorenzo Carver explains how the interaction between auditors and valuation professionals during dual-purpose 409A valuations of common stock and employee stock options destroys value for hundreds of thousands of employees receiving stock options every year by granting options at strike prices that are above th ...

Avoid Hypotheticals. But Remember: Experienced Experts Recognize that Limited Evidence Will Often Support a More Limited Opinion Michael Kaplan explains how limited evidence can still support a limited opinion. Read about a valuator who had access to an insufficient number of documents and a hard cutoff date to complete a valuation by. Since the valuation was prepared in a manner that meets the professional ...

Arizona Board of Appraisal Dismisses USPAP Complaint Filed by Chase   On August 10, the Appraiser’s Guild blog reports, the Arizona Board of Appraisal dismissed the USPAP violation complaint filed by Chase Bank against John Dingeman on initial file review: ...