Consider the Tax Consequences of Stock Awards, Stock Option Awards, and Partnership Profits Interests This discussion summarizes what analysts need to know about the taxation issues and the security valuation issues related to private company equity incentive compensation programs. It focuses on both the taxation aspects and the valuation aspects of implementing an equity incentive compensation plan at a pr ...

A Review of Everett P. Harry, III and Jeffrey H. Kinrich’s 2022 Second Edition In 2017, Everett P. Harry, III and Jeffrey H. Kinrich released Lost Profits Damages: Principles, Methods, and Applications. Their purpose in publishing the book was to provide a comprehensive reference guide to cover important topics relevant to determination of lost profit damages. This book review discusses the second edition r ...

Citation Omitted What makes the world of expert witness services so daunting at times is the fact that so much goes unsaid, untaught, or undefined. For example, the most recent international glossary used by valuation and appraisal professionals across the globe does not define what a conclusion or opinion is. Since saying the silent part out loud seems to be the popular thing to do, this tenth article of t ...

Into the Market-Based Valuation (Part II of II) This is the second of the two-part article regarding country risk. In this second part, the author discusses how to incorporate the risk into multiples. Read Part I here. Incorporating Country Risk into Multiples Having found the value of the country risk premium required, we can proceed with incorporating it into the market-based valuation. It is worth mentio ...

Part II of II This is the second of a two-part article (Read Part I here) that focuses on the situation where the target company is a private corporation, and the sellers are employee/shareholders. This discussion summarizes the taxation and valuation considerations related to a transaction where employee/shareholders are selling the private C corporation stock to a C corporation acquirer. Some of the taxat ...

Into the Market-Based Valuation (Part I of II) This is a two-part article on how to incorporate country risk premium. The market-based approach to valuation is commonly used by market practitioners and is based on the relevant values and multiples from similar assets. One of the differentiators between assets is the country risk related to the operations, when the multiples are collected from various countr ...

(Part I of II) This is a two-part article that focuses on the situation where the target company is a private corporation, and the sellers are employee/shareholders. This discussion summarizes the taxation and valuation considerations related to a transaction where employee/shareholders are selling the private C corporation stock to a C corporation acquirer. Some of the taxation and valuation considerations ...

The Consequences When there is a Mismatch Between the CEO’s Strategy and the Lifecycle the Company is Operating In On December 10, 2021, Aswath Damodaran published a blog titled Musing on Markets. In this blog he asked what makes for a “great CEO”? What happens when there is a mismatch between the lifecycle the company operates in and the strategy pursued by the CEO? He then answered these questions based ( ...

Part II of II This is the second of a two-part article (read Part I) related to the proposed (mostly) GAAP-based income tax in the (perhaps fatally wounded) Build Back Better Act. While the Build Back Better Act may be dead, the GAAP-based income tax is a polarizing concept that may be resurrected soon. The first part focused on why there is a push by some—and pushback by others—on such a tax. The second pa ...

Delicate Balancing (and a Backbone) Required Rarely does a week pass in white collar and investigation or SEC-regulatory outside counsel life that an auditor or government enforcement attorney does not request some form of interim or final read-out or update. These requests for information can encompass investigative process and factual findings, lists of search terms, interview outlines, or similar investi ...

Part I of II This is the first of a two-part article related to the proposed (mostly) GAAP-based income tax in the (perhaps fatally wounded) Build Back Better Act. While the Build Back Better Act may be dead, the GAAP-based income tax is a polarizing concept that may be resurrected soon. The first part focuses on why there is a push by some—and pushback by others—on such a tax. The second part imagines some ...

How (Use of) the Unknown Will Kill You On November 17, 2021, Jim Hitchner presented “How to Attack and Defend the Databases Used by Valuation Analysts”. The presentation raised the following questions: Have you ever been cross-examined by an attorney who is more familiar than you with databases referenced in the valuation report? When was the last time, if ever, that you reviewed and studied the methodology ...

What You Should Know About Them The world as we know it is rapidly changing and the COVID-19 crisis has accelerated the pace of that change. Some experts estimate the pandemic advanced the digital transformation timeline by seven years. These changes have opened many new opportunities for cybercriminals who have adeptly exploited these vulnerabilities. This article will summarize the trends that have create ...

Ask the Right Questions to Elicit the Information Needed for the Story Those that cross-examine and have been cross-examined understand that the questions are intended to elicit information or develop a story that fits their client’s version of events. There is a strategy and, in this article, the author shares how that is accomplished. So, what is the big deal about asking questions? You just say, "Why did ...

Analysts Caveats and Reporting Guidelines (Part V of V) This fifth and final installment presents valuation analyst caveats and reporting best practices related to the intellectual property valuation. Intellectual Property Valuations: The Relief from Royalty Method (Part I of V) Intellectual Property Valuations: Elements of the Valuation Analysis (Part II of V) Intellectual Property Valuations: Application ...

A Fair Payout or a Disaster Waiting to Happen In 2020 alone, approximately 7,300 companies filed for Chapter 11 bankruptcy. Of those corporate debtors, 42 were found to have awarded pre-bankruptcy retention bonuses to a total of 223 executives, with the bonuses totaling approximately $165 million. These pre-bankruptcy bonuses were given to executives anywhere from five months to two days before the filing. ...

Illustrative Example of the Relief from Royalty Method (Part IV of V) Previous installments of this five-part discussion summarized the development of the market approach and the relief from royalty (RFR) method of intellectual property valuation. This fourth installment presents an illustrative example of the practical application of the RFR method. [su_pullquote align="right"] Intellectual Property Valuat ...

A Transition Planning Tool Kit This is an abridged article published by the author. The original article is longer and contains forms referenced but not included here. The author has prepared a tool kit to assist sole practitioners and smaller partnerships with a method of having their practice sold or continued in the event of an untimely death or disability. This tool kit has been prepared to assist sole ...

Application of the Relief from Royalty Method (Part III of V) This is the third article of a five-part series on valuation of intellectual property describing the application of the RFR method. Intellectual Property Valuations: The Relief from Royalty Method (Part I of V) Intellectual Property Valuations: Elements of the Valuation Analysis (Part II of V) Introduction This five-part discussion focuses on the ...

Anecdotes from James R. Hitcher of Moments Spent with Dr. Shannon P. Pratt, a Pioneer in the Business Valuation Industry This discourse shares the author’s long, rewarding relationship with Dr. Shannon P. Pratt, an icon in business valuation (BV). He lived and breathed BV. Outside of his career, he had an intense love of life and liked to have fun. The author, James R. Hitchner, shares what he learned from ...