Recognize and Avoid Substantial Valuation Differentials One of the critical inputs in the capital asset pricing model (CAPM) is beta. In practice, there are two typical ways beta is estimated. Making an incorrect assumption could lead to substantial valuation differentials of over 10% in many cases and can lead to valuation differentials of over 50% in some instances. In addition, our analysis indicates that we would not be able to tell the direction and magnitude of the valuation differential in advance unless the correct calculation is performed. One of the critical inputs in the capital asset pricing model (CAPM) is…
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Reimbursement (Part III of V) As noted in the first installment of this five-part series, an ambulatory surgery center (ASC) is a distinct entity that primarily provides outpatient surgical procedures to patients who do not require an overnight stay after the procedure. The facilities typically provide relatively uncomplicated surgical procedures in a non-hospital, outpatient setting, and most ASC cases are non-emergency, noninfected, and elective. This third installment on the valuation of ASCs will discuss the reimbursement environment of ASCs. [su_pullquote align=”right”]Resources: Valuation of Ambulatory Surgery Centers—Introduction (Part I of V) Valuation of Ambulatory Surgery Centers—Competition (Part II of V) [/su_pullquote]…
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On April 8, 2020, the American Society of Appraisers (ASA), CBV Institute, Global Association of Certified Valuators and Analysts (GACVA), National Association of Certified Valuators and Analysts (NACVA), and The Royal Institution of Chartered Surveyors (RICS) collaborated to host a free virtual town hall to discuss how the COVID-19 pandemic will impact business valuation analysts and appraisal titled “Impact of COVID-19 to Global Business Valuation and Appraisal.” This article attempts to unpack the post-COVID-19 guidance discussed during this town hall and provide a synthesized breakdown of the most critical advice provided. [su_pullquote align=”right”]Resources:NACVA COVID-19 Public Service Campaign | Staying in…
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Competition (Part II of V) This second installment in this five-part series on the valuation of ASCs will discuss the competitive environment of ASCs, by competitor type. [su_pullquote align=”right”]Resources:Valuation of Ambulatory Surgery Centers—Introduction (Part I of V)[/su_pullquote] As noted in the first installment of this five-part series, an ambulatory surgery center (ASC) is a distinct entity that primarily provides outpatient surgical procedures to patients who do not require an overnight stay after the procedure.[1] The facilities typically provide relatively uncomplicated surgical procedures in a non-hospital setting, and most ASC cases are non-emergency, non-infected, and elective.[2] ASCs compete in an increasingly…
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Introduction (Part I of V) Ambulatory surgery centers (ASC) grew dramatically until 2008 and during the growth period provided services previously only available at hospitals. In this five-part series, the authors first discuss the emergence and decline of ASCs, the forces driving growth and contraction, and how the ASC business model differs from that of hospitals. The remaining articles in this series discuss: 1) the regulatory environment of the ASC industry; 2) the reimbursement environment of the ASC industry; 3) the competitive environment of the ASC industry; and 4) the technological environment of the ASC industry. These provide a brief…
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Buyer and Seller Beware When a privately-held acquirer uses its stock to partly purchase a company, it is imperative that both the acquirer and the target in a transaction have support for, and a level of comfort with, the value assigned to the acquirer’s shares if they are being issued as part of the deal. It is especially important for the seller to conduct its own due diligence to better assess its risk exposure and understand the fair value of intangible assets. This article discusses procedures that sellers and buyers should consider before finalizing the terms. We are all familiar…
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What Do We Do Moving Forward in Time? The coronavirus and the events unleashed by the outbreak were unforeseeable to professionals preparing reports as of the end of 2019. What do we, as valuation and litigation support professionals, do moving forward in time when we are engaged to value a business? Here, the author, Ron Rudich, answers these questions. Gary R. Trugman wrote in his tome, Understanding Business Valuation, A Practical Guide to Valuing Small to Medium-Sized Businesses, Second Edition, beginning on page 510, the following: Valuation as of a Specific Date A business valuation is similar to a balance…
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Opportunities Available to Drive Revenue and Remain Relevant Q1 2020 is already in the books. If you are thinking about your practice development goals, strategies, and tactics for the rest of the year, Rod Burkert has some ideas regarding what to do and identifies the opportunities associated with five options. Hard to believe that Q1 2020 is already in the books. And you might be thinking about your practice development goals, strategies, and tactics for the rest of the year. What we can achieve (goals) and how we achieve it (strategies and tactics) will be affected by forces that influence…
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Valuing Liabilities Differs from Valuing Assets Valuing contingent/unliquidated liabilities raises some interesting questions. Do contingent/unliquidated liabilities have liability-specific risk? If yes, does liability-specific risk result in lower or higher obligations? Why do contingent/unliquidated liabilities related to lawsuits tend to settle as opposed to go through verdict and appeals? This article addresses these questions. Valuing contingent/unliquidated liabilities raises some interesting questions. Do contingent/unliquidated liabilities have liability-specific risk? If yes, does liability-specific risk result in lower or higher obligations? Why do contingent/unliquidated liabilities related to lawsuits tend to settle as opposed to go through verdict and appeals? This article addresses these questions.…
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Relevance and Alternate Approaches to Succeed Traditionally, accounting and financial services organizations have relied on their firms’ partners to “make it rain” or by using their connections, both personal and professional, along with a sprinkling of charisma, to bring in new business and revenue. How effective is this traditional model in a technology driven world where buyers of services can now access more information than ever to use in their decision-making strategies? Dr. Frederiksen discuss the relevancy of this traditional model. Traditionally, accounting and financial services organizations have relied on their firms’ partners to “make it rain” or by using…