Part I of IV This is the first article of a four-part series. This initial article summarizes the generally accepted property appraisal approaches and methods that appraisers typically consider in a bankruptcy-related assignment. This discussion also describes the property appraisal synthesis and conclusion process. Due to the litigious nature of a bankruptcy proceeding, bankruptcy-related property appraisals are often subject to a rigorous contrarian review. Therefore, this discussion summarizes what the parties-in-interest (and their legal counsel) and the appraiser should know about an effective (i.e., persuasive) bankruptcy-related property appraisal report. Introduction After adjusting to the initial pandemic-related disequilibrium, many industry segments…
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An Outline for Making Awards Useful and Final (Part III of III) Appraisal is a frequently used and often maligned method to adjudicate disputes in the property insurance world. Typically, appraisal is used for the purposes of evaluation only and will not bring finality to a claim in which coverage, or, in certain jurisdictions, causation is also being disputed. Although the perceived advantages of appraisal versus litigation are that it is considered fast, inexpensive, and relatively final, the appraisal process is often criticized because of unpredictable awards that are not helpful in settling a disputed claim and, in some cases,…
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Why isn’t that client opting for the higher level of service? Why hasn’t that prospect accepted my proposal? Why can’t these people see the value in what I do? Can’t they see I’m an investment, not a cost? Oh, sorry—I’m not talking about your clients and prospects. I’m speaking for your current and potential vendors, i.e., that means you, but from someone else’s perspective. In this article, the author proposes that we reflect on why prospects shop for services and recognize that, perhaps, we are not offering them what they need and that we too do the same. Why isn’t…
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Conclusory Conclusions and Opinionated Opinions Tests of Time The current valuation environment tends to be more about supporting the conclusion of value based upon the chosen approach and methodology with consideration of all three approach to business valuation far too often involving little more than the analyst placing a wet finger in the air and saying “ah yes, a discounted cash flow.” This eleventh article of the Unimpeachable Neutrality series discusses the need for abductive inferences when valuing a business and delineates conclusory conclusions, opinionated opinions, and concluded opinions of value. I have a business that I would like to…
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An Outline for Making Awards Useful and Final (Part II of III) Appraisal is a frequently used and often maligned method to adjudicate disputes in the property insurance world. Typically, appraisal is used for the purposes of evaluation only and will not bring finality to a claim in which coverage, or, in certain jurisdictions, causation is also being disputed. Although the perceived advantages of appraisal versus litigation are that it is considered fast, inexpensive, and relatively final, the appraisal process is often criticized because of unpredictable awards that are not helpful in settling a disputed claim and, in some cases,…
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A Review of the Basics for Lost Profits (Part II) In this second part of our series reviewing the basics for lost profits, we will contrast the differences between valuing a lost business and calculating an ongoing business’s lost profits. Because many experts calculating lost profits also provide business valuations, both in and out of litigation, it is good to be reminded of the similarities and differences between these two approaches when assessing commercial damages. In this article, we review five key categories that separate the approaches for calculating lost profits from valuing a lost business. It also is a…
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Guidelines for Resolving Disputes in First Party Property Insurance Claims (Part I of III) Appraisal is a frequently used and often maligned method to adjudicate disputes in the property insurance world. Typically, appraisal is used for the purposes of evaluation only and will not bring finality to a claim in which coverage, or, in certain jurisdictions, causation is also being disputed. Although the perceived advantages of appraisal versus litigation are that it is considered fast, inexpensive, and relatively final, the appraisal process is often criticized because of unpredictable awards that are not helpful in settling a disputed claim and, in…
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A Review of the Basics for Lost Profits (Part I) Those who have worked in the forensic field for many years begin to take for granted how we approach and handle certain situations. We have a level of knowledge and experience that lets us move forward without much research. But, with this level of experience and understanding comes a level of forgetfulness. Not that we forget how to perform the analysis, but we forget why we need to perform an analysis a certain way. I believe it is good from time to time to stop and ask, “Why do we…
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September 2022 This article summarizes Agnelli v. Lennox Miami Corp., 2022 U.S. Dist. LEXIS 125346, 2022 WL 2788875 (S.D.Fl. July 14, 2022). This state of Florida case shows that nepotism does not always work out so well. The case involves misappropriation of corporate money, fair value valuations, the use of discounts for lack of control and marketability, and statutory interpretation. As Garry Marshall famously said, “When in doubt, you bring in relatives. Nepotism is a part of my work.” Agnelli v. Lennox Miami Corp., 2022 U.S. Dist. LEXIS 125346, 2022 WL 2788875 (S.D.Fl. July 14, 2022) shows that nepotism does…
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Targeting Construction and Real Estate Industries It has become commonplace in the real estate and construction industry to make electronic, digital, and wired payments, especially with the very large sums that are often transferred. With paper checks disappearing, cybercriminals are now targeting these industries—victimizing both payors and payees—and causing significant financial tension and reputational harm. As evidenced by a recent FBI bulletin specifically warning the construction industry, fraudsters have become increasingly sophisticated, hacking into e-mail servers, posing as escrow agents or company employees, intercepting wire transfers before the payee or payor even realize it. The author discusses the schemes that…
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From week to week, we need to work on making our practices better and more effective. It can be hard. It takes a commitment of time and effort, energy, and thought. But what IS easy is making small improvements from week to week that, over the course of say, a month, make a dramatic difference in the efficiency or effectiveness of our practice processes and procedures—by identifying and getting rid of drag and waste. So here are 18 ideas that can help. Got any engineering-type friends? If you do, you know they are all about substance over form. Performance over…
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Behavioral Underpinnings of Greed In this article, the authors discuss the unprecedented growth of cryptocurrency and the accompanying risks and fraud. They ask, Why does a person choose the characteristics of cryptocurrency to be not only a secure medium of exchange, but also one with upward price potential? The recent price drop in the spring of 2022 shows the magnitude of loss of value Bitcoin has suffered in a very short period. Is there an element of gambling that seeps into the mindset of the crypto investor? Or could it be that the primary allure is the relative anonymity of…
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Calculating Lost Revenue Lost profit damages are calculated when a plaintiff’s business alleges that the defendant’s actions impaired its operations in some manner. Determining lost revenues is a critical component in calculating lost profits. Lost profits are based primarily on lost revenues net of the cost associated with generating the lost revenues (saved and/or extra operating expenses can be additional components to lost profits). This article will discuss some of the most common methods used to calculate lost revenues and the importance of facts and data supporting such calculations. Introduction Lost profit damages are calculated when a plaintiff’s business alleges…
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and Credentialing Organizations The author in this article discusses cases where members of credentialing organizations sue the organization for injunctive relief and monetary damages. He discusses the role of the arbitrator and causes that appear to prompt members to pursue redress through the court once sanctioned. Introduction As I mentioned in my first article for QuickRead, my experience as an Arbitrator includes presiding over three disputes between aggrieved members, as well as an aggrieved, expelled member of more than one credentialing organization, fortunately not including NACVA. These disgruntled and disciplined members sued for both injunctive and monetary relief. In the…
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Valuation Implications Over the past couple of months, the Centers for Medicare & Medicaid Services (CMS) released the proposed rules for several of its payment schedules, indicating the state of healthcare reimbursement for the next year. This article briefly summarizes these proposed payment rules and discusses their significance to healthcare valuation professionals. The U.S. government is the largest payor of medical costs, through Medicare and Medicaid, and consequently has a strong influence on physician reimbursement. The prevalence of these public payors in the healthcare marketplace often results in their acting as a price setter, and being used as a benchmark…
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Has Work-Life Balance Changed After COVID-19? In this article, the author shares a personal story regarding how the COVID-19 outbreak affected her role as a professional and mother. The story shared is about perseverance and focus, and emerging emotionally stronger as a mother and valuation professional. Like many valuation analysts, I began my career at a CPA firm. Several years into my career, I became a mother. I was passionate about my work and wanted to continue my career but did not want to outsource motherhood. I gained valuable experience from some of the professionals I worked for but ultimately…
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July 2022 This article focuses on Partner Reinsurance Co. v. RPM Mortgage, Inc., 2022 U.S. Dist. LEXIS 94244 (S.D.N.Y. May 25, 2022). This is a case of buyer’s remorse. The target’s financial condition changed dramatically after the LOI and buyer attempted to renegotiate the acquisition terms. This case illustrates how damages were calculated. Buyer’s remorse: everybody’s experienced it at one point or another. For me, it was a very ugly Hawaiian shirt; for Elon Musk, it appears to be Twitter. Partner Reinsurance Co. v. RPM Mortgage, Inc., 2022 U.S. Dist. LEXIS 94244 (S.D.N.Y. May 25, 2022) was a case of…
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And Valuation Consultations Business valuation reports are somewhat of a competitive product. We may not feel that way because of all the effort we put into them, but many clients do not understand the value to them and look at the valuation as a “mechanical” process. Additionally, there are many other valuation preparers that provide valuations at fees substantially below what a valuation professional might charge. Here is a discussion of some alternative ways of pricing valuations and consultation services, and presenting the value to the clients. Business valuation reports are somewhat of a competitive product. We may not feel…
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VPS StraightTalk Webinar, June 22, 2022 On June 22, 2022, VPS StraightTalk Webinar held a webinar that featured Marc Bello. This article summarizes the issues presented in the webinar, “Understanding Complex Compensation in Marital Divorce.” “Understanding Complex Compensation in Marital Divorce” by Marc Bello, CPA, ABV, CVA, MST, Partner with Edelstein & Company, LLP, was broadcast by VPS StraightTalk Webinar, June 22, 2022. The type of compensation discussed consisted of equity-based compensation plans, such as non-qualified deferred compensation plans, stock options, restricted stocks, supplemental executive retirement plans (SERPs), and performance awards. The program was ideally suited to business valuation professionals…
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Tied Into Business Valuation This article provides readers with current information that emphasizes how the brain works. Understanding how the brain works and factors that may affect it positively or negatively may impact conclusions and factors that find their way into a business valuation. There are potential biases and/or blind spots. The author is not a neuroscientist but shares neuroscientific knowledge because he believes understanding brain function will alert readers to factors that may enhance one’s own analytical prowess and also find a place in the business valuation practitioner’s practice. Having worked with neuroscientists for over nine years,[i] doing research…