November 2022 The importance of consumer protection laws can seem unfathomable when you see a label on a sweater reminding you to remove the child before laundering, but laws prohibiting deceptive trade practices and false advertising exist because the incentives to run roughshod over consumers are significant. Since the individual harm resulting from consumer fraud is often small, those laws often provide for statutory damages to give consumers an incentive to pursue their claims and for producers to refrain from defrauding customers. For businesses selling and promoting their products nationally, statutory damages can mount quickly. This article discusses Monera v.…
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On Business Valuation The effects of inflation on consumers’ spending and psyche are well-known. The difficulties each causes in day-to-day life are often discussed. Inflation has affected everything from the cost of transportation to the cost of food and housing. What is less discussed, however, is how the current inflationary period is affecting small business owners and their companies. In this article the author shares his impression. U.S. Inflation Calculated annually, the U.S. Inflation Rate reflects the average percentage by which the price of a specific basket of goods and services purchased in the United States has increased. The U.S.…
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Alleged Best Practices to Whom? Peter J. Butler, CFA, ASA, MBA, founder of Valtrend, LLC and inventor of the Total Cost of Equity Calculator (TCOE), responds to comments made by Robert Reilly and Connor Thurman regarding best practices used to arrive at the company specific risk; the latter article did not discuss the TCOE and here he “key[s] in on Part III—the section which addresses empirical evidence in the selection of the company specific risk premium (CSRP)” and merits of the TCOE. Introduction I read all four parts of the “Best Practices for Estimating the Company-Specific Risk Premium” in NACVA’s…
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It is that time of the year when we take stock of what we accomplished, what we did not, and plan for next year. But chances are, you may be too focused on tasks you can check off when they are done and not the big picture goals or where they are leading you towards—or not. This article discusses the importance of taking-in the big picture—the goals, strategies, and tactics—as one develops and/or reviews the marketing strategy. It is that time of the year when we take stock of what we accomplished, what we did not, and plan for next…
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A Review of the Basics for Lost Profits (Part III) This is the third installment of this series. The first part provided an overall introduction to this review of the basics for lost profits. The second part reviewed the similarities and differences between estimating lost profits and litigious based business valuations. This installment takes a deeper look into the methods for calculating lost profits. Four methods based on the “but for” theory are examined. The discussion of each methodology highlights the approaches taken for calculating lost profits and weaknesses or concerns that arise with each method. Read Part I Here…
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The Consistency of Data and Trends The real estate sector encompasses a variety of activities, limited only by the imagination, including: selling, leasing, management, development, appraisal, title services, and investment. When valuing businesses linked to the real estate market, whether directly or indirectly, it is essential to examine both the risk and the cash flow generating ability of each company. The co-authors of this article share essential aspects appraisers must consider in these valuation engagements. The real estate sector encompasses a variety of activities, limited only by the imagination, including: selling, leasing, management, development, appraisal, title services, and investment. When…