Forensic engagements that involve determining lost profits or other economic damages often require a “time series” of economic and market data. When the lost profits or other economic damages engagement involves comparing international companies, multi-country economic data, and international market data, the challenges in locating meaningful data become especially difficult. In this article, the authors share how a time series analysis was used in an engagement, resulting from a breach of a franchise in a European Union (EU) country. To perform the time series analysis, the authors needed to gather multi-country economic data to determine the alleged lost profits and/or…
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Procedures and Bankruptcy Code Changes for CPAs and Consultants A business or individual facing financial distress can utilize three types of federal bankruptcies to attempt to resolve their financial difficulties. This article provides an overview of the differences and when each would be used. Keep in mind that bankruptcy is a legal proceeding and must be handled by an attorney. However, business and financial advisors need to have a good understanding of the process, when a bankruptcy is necessary, and which type is most applicable. Advisors need to be able to take a dispassionate view and assist in advising a…
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Their Potential Impact on Valuing a Construction Contractor Construction claims may impact the value of a construction company. In this article, the author discusses the issues that arise and the methodologies that may impact the valuation. A construction claim is a demand made by the contractor to the owner for additional revenue for construction work performed on a construction project which is beyond the terms of the contract. Simply stated, a construction claim is a change order that has not been settled or negotiated between the owner and contractor. If the construction claim cannot be settled or negotiated, then most…
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For When a Client Wants to Sell Their Business The authors in this article share a checklist developed and provided to firm clients contemplating a sell of their business. Following are the steps involved when a client wants to sell their business. Buyers can also use this list as a timeline and road map of the steps that are expected to occur and what is expected of them. ❏ Be sure client wants to sell ❏ Be doubly sure client wants to sell. Them saying it does not make it so. Many prospective sellers start the process but do not…
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Repurchase Obligation Liability There are certain valuation aspects that are unique to employee stock ownership plan (ESOP) sponsor company valuation engagements. The ESOP repurchase obligation is one of those aspects. There is a diversity of practice in the valuation profession as to how to treat the repurchase obligation for sponsor company valuations performed for ESOP administration purposes. There are several alternatives that may be appropriate depending on the facts and circumstances of the assignment, and the analyst’s interpretation of the fair market value standard of value for ESOP administration engagements. This discussion provides a hypothetical ESOP sponsor company valuation to…
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Seven Things You Can Do When You Have Nothing To Do You were humming along nicely … until the shelter-in-place orders hit. All cylinders were firing. You were busy! And now you are not … or not as. What do you do with the (hopefully temporary) lull? Panic? Or use the opportunity to systematically find more work? You were humming along nicely … until the shelter-in-place orders hit. All cylinders were firing. You were busy! And now you are not … or not as. What do you do with the (hopefully temporary) lull? Panic? Or use the opportunity to systematically…
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Target Market Research Why do some professional services firms grow faster than others? The 2020 High Growth Study provides insights on this topic—and on the impact of doing original research about one’s target audience. The author in this article shares the value of target marketing. Why do some professional services firms grow faster than others? The 2020 High Growth Study provides insights on this topic—and on the impact of doing original research about one’s target audience. The data is compelling. Simply put, firms that conduct frequent research on their target audiences grow faster. As shown in Figure 1, doing even…
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A Leverage ESOP versus a Non-Leverage ESOP An employee stock ownership plan (ESOP) is a qualified retirement plan that allows employees to hold equity in the sponsor company that employs them. There are various strategies that may be considered when the sponsor company forms an ESOP. One important structural decision regarding the ESOP formation is whether the ESOP will be leveraged or non-leveraged. This discussion compares the leveraged ESOP structure and the non-leveraged ESOP structure. Introduction There is a reason for the phrase, “no two ESOPs are alike.” An employee stock ownership plan (ESOP) can be structured to meet a…