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 real estate appraisal and business appraisal. An excerpt:
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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.
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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 Court, Appellate Division, Sieger v. Zak, that provided a useful summary of clear precedents and set clear guidelines that that all experts should be aware of.
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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 complicated and subject to a number of limitations. Ron Stacey explains some issues surrounding earnouts, including their appeal, shortcomings, possible structures, appropriate metrics, duration, tax treatment, and value.
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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 legal changes and possible tax incentives have been announced, he writes, and “they seem to be doing the trick”: At last count, the number of employee-owned businesses in the UK is increasing by 10% year on year,…
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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. Find out what “flexons” are, and how they offer a uniquely helpful approach to problem solving in today’s organizations.
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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. Collaborate. Succeed.,” the four-day conference will serve as a forum where ideas, marketplaces, and professionals from around the globe intersect to expand their networks, explore concepts, and share ideas on how to meet the demands of the dynamic and unpredictable world economy. Find out…
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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—and a withdrawing member was the source of almost all the company’s business. Instead, current asset value is key. Find out more.
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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 to enter the market, Reuters reported March 19, and Appraiser News Online highlighted this week. DeMarco made his comments March 19 before the House Financial Services Committee. The Appraisers News Online explains:
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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, and a company or individual is claiming that there are lost profits because of it. We can never know with complete certainty what revenue or profits would have been if that incident or action had not taken place. Mathematical precision…
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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 and the International Accounting Standards Board (IASB) continue to work toward a common standard. The new comment deadline on Proposed Accounting Standards Update, Financial Instruments – Credit Losses (Subtopic 825-15) is May 31, 2013.
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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 help promising young companies achieve their potential,” asserted this week (3/26/13) that past performance of a company is no longer a viable valuation tactic. What matters? Newer techniques that many firms aren’t taking advantage of:
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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 need it.
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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 profit. Profits reward us for both competency and efficiency. Rand Curtiss explains how to be both effective and efficient.
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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 due diligence and the definitive agreements. Ron Stacey explains.
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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:
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Estate of Elkins Included Works by Picasso, Jackson Pollock, Henry Moore, Paul Cezanne, and Jasper Johns Roger Russell at Accounting Today reports that in the case, Estate of Elkins, 140 TC No. 5, the court applied Section 2703(a)(2) of the Tax Code in valuing the art, which included works by Picasso, Jackson Pollock, Henry Moore, Paul Cezanne, and Jasper Johns. Section 2703(a)(2) of the Tax Code provides that the value of any property should be determined without regard to any restriction on the right to sell or use the property. The IRS Commissioner claimed an estate tax deficiency in excess of $9…
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70 Percent of the Work Appraisers Did at Landsafe, Bank of America’s Appraisal Division, Was Related to Soured Home Loans Bank of America Corp.’s appraisal division LandSafe reduced about 5% of its work force, beginning Feb. 22, Bloomberg News, The Appraisal Institute, and Housing Wire reported. LandSafe had more than 1,000 employees, the report said. Hugh Son at Bloomberg explains a bit about the move:
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Based in Florida and Employing 600 Personnel in 59 Offices, New Company Is Third Largest Firm Providing Commercial Real Estate Valuation Advisory Services Forty-two independent CRE appraisal companies, with a total of 59 offices and 145 MAIs, have merged to form Valbridge Property Advisors (www.valbridge.com), Commercial Property Executive reports. The new company, headquartered in Naples, Fla., will rank in terms of size behind only Integra Realty Resources and CBRE among companies providing CRE valuation and advisory services. Here’s more:
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Tax Crackdown Comes as Use of Contract Workers Grows; Companies Find Rules Unclear Angus Loten and Emily Maltby at the Wall Street Journal report that some studies have shown that local businesses misclassify anywhere from 10% to more than 60% of their workers as independent contractors, and regulators are beginning to crack down in pursuit of more revenue. An excerpt: