Why VCs and Private Equity Pros are Sensitive to IRC 409A Valuations Rand Curtiss weighs in on why IRC 409A option-related valuations for small businesses do not solve real business problems for them. They set minimum exercise prices, asserts Curtiss—but that’s all they do. ...

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It’s Responsible and Efficient to Begin Appraisals by Granting Certain Assumptions and Respecting Precedent. Here’s Why. All kinds of news, findings, and rulings come out that might affect the work of financial consultants and appraisers every day. When can you know when a precedent is important or something you can ignore? Or, put another way: what information is most important to pay attention to? Rand Cu ...

What is Considered Good Business Sense Today May Be Considered a Breach of Fiduciary Duty Tomorrow. Pay Special Attention to Fairness Opinions. Are your clients risking liability as they complete their daily tasks? What is considered good business sense today may be considered a breach of fiduciary duty tomorrow. That possibility is increasing. Business appraisers should pay special attention to fairness op ...

Understanding Both Sorts of Appraisal is Critical to Valuing Minority, Partial Interests in Holding Entities that Own Real Estate and Other Assets that are Gifted, Sold, or Otherwise Transferred   Randolph Glennon, MAI, CRE, MBA, and president of Eastern Appraisal & Consulting in Portland, Maine, explains in the New England Real Estate Journal why there's growing need for appraisers who understand both ...

Case Summaries from the U.S. Court of Federal Claims and the Appeals Courts of the Sixth and Seventh Circuits A corporation lies in applying for federal loan guarantees—and faces treble damages in United States v. Anchor Mortgage.  In Naylor v. Invacare, plaintiff’s request for information plays a key role.  Find out more. ...

There’s an Important “Crime-Fraud Exception” to Attorney Privilege Experts Need to Be Aware of. Here are Some Key Legal Guidelines to What Is and Isn’t Legally Protected Communication When experts counsel business owners and represent them legally, what is the legitimate scope and possible limits of attorney-client privilege?  Jim Hitchner reviews the findings of a key 2009 decision by The New York Supreme ...

Earnout Variables Often Account for 15 to 25 percent of Purchase Price in many Middle Market Acquisitions. Here are Tips for Structuring Them Carefully Earnouts typically appear in a large number of middle-market deals, usually accounting for 15 to 25 percent of the total purchase price.  While an earnout can to be an elegant solution to “close the gap” between seller and buyer, the fact is earnouts are com ...

The Thought of Every Employee Working Together with a Shared Vision of Business Success is a Dream Situation for Companies.  Here's How to Make it Happen.  Gary Davie Friday at Management Today weighs in on how in 2012 the U.K. government (Management Today is UK-based) announced its support for employee ownership, recognizing its ability to promote long-term thinking and growth.  Since then, a number of leg ...

Tricky Problems Must be Shaped Before they Can be Solved.  To Start That Process, and Stimulate Novel Thinking, Leaders Should Look Through Multiple Lenses  In the April 2013 edition of McKinsey Quarterly, Olivier Leclerc and Mihnea Moldoveanu outline an approach for taking a number of different approaches simultaneously to solving difficult problems. These involve flexible approaches using team expertise. ...

Held at the Hilton Hotel in Washington, DC, the Annual Consultants’ Conference Will Feature 57 Sessions Covering the Highest-Demand Specialty Areas in Financial Consulting  The National Association of Certified Valuators and Analysts (NACVA) and the Consultants’ Training Institute (CTI) will collaborate to host the 2013 Annual Consultants’ Conference, June 5–8, 2013, in Washington, DC.  Themed “Innovate. Co ...

Recent Cases Consider: Fair Market Value in Arkansas, Equalization Payments and Healthcare Credits in Iowa, and Valuations Based on Future Cash Flow in Louisiana Judge Wiggins in Iowa rules In re Marriage of McDermott on equalization payments and tax credits for health insurance payments.  In Louisiana, Judge Williams finds a valuation in Fancher v. Prudhomme invalid since it was based on assumed cash flow— ...

Congress Needs to Reduce, if Not Eliminate, Support of the Mortgage Market in Order to Encourage Private Capital to Enter the Market, Says Agency Head Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco said that Congress needs to take action to significantly reduce, if not eliminate, the government’s continued support of the mortgage market and make it more palatable for private capital ...

How Can You Defend "Reasonable Certainty"?  Here are Some Tips One of the common issues raised when an expert calculates damages is “reasonable certainty.”  It is not uncommon for opposing counsel to suggest that the expert’s calculated damages are speculative, explain the editors at the Fraud Files blog.   The calculation of damages necessarily requires estimates and assumptions.  Something has happened, a ...

Key Concern is that FASB and IASB Continue Work Towards Common Standard Frank Byrt at Accounting Web reports that The Financial Accounting Standards Board (FASB) voted March 28 to extend the comment deadline for its proposal to improve financial reporting on expected credit losses on loans and other financial assets held by banks, financial institutions, and other public and private organizations, as FASB a ...

Past Performance is No Longer a Viable Valuation Tactic: Learn to Anticipate Future Prospects with Data Mining, Proprietary Benchmark Techniques, and a Close Look at Both Cash Flow and Capital Expenditures.    Caleb Slabbert, writing at VentureCapital.org, which bills itself as a non-profit organization that has been "a premier resource for both entrepreneurs seeking funding and for investors who want to he ...

Physicians Practices are Undergoing Consolidation. Most Often, Practices are Acquired by Hospitals—and a Prerequisite to Acquisition by a Hospital is Having a Practice Valuation Performed. Here’s Why. Physician practices are increasingly undergoing consolidation, and any acquisition requires a valuation performed by an independent third-party valuator. Here’s the low down on what valuators need and why they ...

A Quick Initial Assessment of an Appraisal Assignment Can Help Determine Which Approach and Which Tools to Use. Here’s Why That Matters. Appraisers have a large toolkit. When we pursue certifications, the tests we have to pass and our demonstration reports show that we know how to use tools properly, and certifications demonstrate our competency. In the real world, we are also in this profession to make a p ...

Buyers and Sellers Have Different Relative Negotiation Advantages, and the Letter of Intent in an Engagement Helps Define Terms. Here’s How. While perhaps not the longest or most expensive document among those found in the in the M&A process, the letter of intent (LOI) may well be the most important, particularly to the seller. The LOI sets the tone for the transaction and serves as the road map for the ...

Many States Require CPAs Practicing Forensic Accounting to Now be Licensed as Private Investigators.  The AICPA Provides an Online Guide. Jeff Drew at the Journal of Accountancy reports that the AICPA has made available to members an online guide detailing which states and cities require CPAs practicing forensic accounting to be licensed as a private investigator.  Here's more detail: ...