Apropos Restrictions of Data, Time, and Financial Resources When uncertainty rises to a level—where facts appear to be indistinguishable from fiction—business valuation, forensic accounting, and litigation support must prioritize the virtues of unimpeachable neutrality, integrity, and objectivity. These three virtues provide a means of best assisting the trier of fact in distinguishing that which is misleading from that which is centered upon the facts, data, and evidence regarding material matters, questions, or issues of fact or law. In a world where people consume and embrace fake news and alternative facts and deem those “truths”, the once highly valued authority of…
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If I Were Starting Today Business valuation and financial litigation services (BVFLS) practitioners—since the COVID-19 disruption—have embraced the use of social media. Yet, some BVFLS practitioners remain on the sidelines. In this article, Rod Burkert shares 10 social networking tactics he would use today to build his BVFLS practice. One thing I have seen since COVID-19 began is the uptick in social media usage by business valuation and financial litigation services (BVFLS) professionals … first, by those who were already using social media and who were amping up their efforts, and second, by those who were not previously using social…
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the Value of a Business Buyers look at earnings as a primary driver of value. There are many other factors such as strategic value, competitive position, branding, secret processes, and cost to duplicate. There are also many other factors, some not so evident or obvious, some intangible and some in the “good feelings” attitude about the business or its prospects. At the end of the day, it is sometimes hard to pinpoint exactly what made the difference for the buyer to close on the transaction. This article presents 64 items that can either increase or enhance a business’ value, or…
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Accounting Challenges and Judgments Topic 606 of the FASB’s Accounting Standards Codification (ASC 606) dictates the timing and amount of revenue companies recognize for a given transaction. ASC 606 requires companies to identify performance obligations in contracts with customers and allocate the transaction price among those performance obligations. Revenue is recognized when control of an asset is transferred to the customer. For many transactions, revenue recognition is a complex reporting exercise that requires careful application of judgment to contractual provisions and assumptions about market conditions. This article illustrates some of the complicated revenue recognition questions that can arise for vaccine…
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Pack the Toolbox With Preparation, Information, Persuasion, and Closure It does not matter if you are negotiating with a client, attorneys on the other side of a case, co-workers, or a family member, the more negotiation tools in the proverbial “toolbox” the better the outcome. There are several key areas that one needs using this toolbox to focus on and those include: advance preparation, persuasion, acquiring information, and closure options. This article discusses these areas to effectively mediate or negotiate. It does not matter if you are negotiating with a client, attorneys on the other side of a case, co-workers,…
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Moving Forward During COVID-19 The COVID-19 pandemic has brought difficulties and major lifestyle changes for most of us. This is particularly true for the business world. Some firms have been negatively impacted. Some businesses have benefitted from the change in our lifestyles. Because causation is an important consideration in commercial damages cases, experts assigned to estimate lost profits must consider the impact of COVID-19 on a business or industry when calculating damages for 2020 and 2021. Courts are aware of the impact COVID-19 has had on the economy and the public. This article addresses issues experts should consider when assessing…
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Perceived Value is the Driver Alan Weiss wrote a book titled Value-Based Fees, How to Charge – and Get – What You’re Worth. Even though the book was published more than fifteen years ago, it still offers pearls of wisdom for consultants today. One key takeaway involves recognizing the importance of perceived value, which should be the basis of the contractual relationship. Alan Weiss wrote a book titled Value-Based Fees, How to Charge – and Get – What You’re Worth. Even though the book was published more than fifteen years ago, it still offers pearls of wisdom for consultants today.…
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A Business Valuation for a Controlling Interest CPAs are subject to multiple standards. Often, the standards prevent CPAs from exercising their judgment or applying common sense. The author describes this as “miss[ing] the boat.” This article illustrates this and provides an actual example where a group of valuators missed the boat. The purpose here is not to belittle, but to prompt CPAs to reflect on how they manage engagements and to think outside the proverbial box. As professionals, we are taught to be complicit with a myriad of guidelines. Below are a few of the rules CPAs who are members…
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Beyond the Tale of the Three Bears Terminal values deserve substantial attention for the reason that that is where (most of) the value is found. Some approaches to terminal value tend to result in higher values, whereas other approaches tend to result in lower values. This article provides some insight into the implied assumptions and relative biases of these approaches. Terminal values deserve substantial attention for the same reason Willie Sutton robbed banks—that is where (most of) the value is. Some approaches to terminal value tend to result in higher values, whereas other approaches tend to result in lower values.…
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Here is How I Changed my Mindset Asking for a referral may seem egotistical and a bit self-centered, but it is also a good business practice. In this article, Rod Burkert shares two personal obstacles he overcame that kept him from asking for referrals and what changed his mind on this matter. When it comes to building a pipeline of work, referrals are the lifeblood of a BVFLS practice. So why did I feel so awkward asking my clients for them? What was my problem? Turns out there were two. Problem #1 The first problem was my personality. I know…
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Reconsidering the Use of CEFs as a Proxy for DLOC The market pricing of publicly traded closed-end funds based on net asset values is not a reliable proxy for estimating discounts for lack of control for closely held businesses having a portfolio of marketable securities. Despite the acceptance for decades by the highest courts of this valuation method, the author, in this article, sets forth the basis for questioning this established practice. The market pricing of publicly traded closed-end funds (CEFs)1 based on net asset values (NAVs) is not a reliable proxy for estimating discounts for lack of control (DLOC)[1]…
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Operational Finance—A New Way to View your P&L? Have you ever thought about your accounting systems as more than an expense, and how it may benefit you, above and beyond reporting numbers and forms? It can and should be more than an expense. In this article, the author discusses the potential insight gained by tracking the data. Books and records. Bookkeeping. Accounting. Tax returns and quarterly filings. Businessowners typically view these as required administrative duties and consider it an expense. Have you ever thought about your accounting systems as more than an expense, and how it may benefit you, above…
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The Proof is in the Accounting Principles When presenting or rebutting construction claims, there is merit in the forensic accounting adage, “Follow the money trail you will find what happened” The reasonableness and reliability of the construction damages claimed on a project is in the accounting principles. The message in this article is how a forensic accountant can benefit the construction claims process on a construction project through the application of basic accounting principles. When presenting or rebutting construction claims on a construction project, there is merit in the forensic accounting adage, “Follow the money trail and you will find…
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Beyond the 40 Hours of CPE and Embracing Continuous and Mindful Learning The traditional requirement to account for 40 hours of CPE is often viewed as an annual hurdle. This mindset needs to change. This requirement is an opportunity to commit to continuous learning and improvement. In this article, the author identifies the impediments and opportunities to continuous professional and mindful development. [su_pullquote align=”right”]Resources: Consultants’ Training Institute Professional Education [/su_pullquote] In a world that is rapidly changing, company leaders in every industry are being faced with adapting to the trends that redefine the ways in which we conduct business. While…
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Non-Litigation #2 and Litigation #4 The NACVA’s Standards Board was formed to continually review the organizations’ standards and to ensure that the NACVA’s Professional Standards remain up to date, relevant, and relatively consistent with the standards of the other professional organizations. This article addresses the second Non-Litigation and the fourth Litigation FAQ Interpretations published by the NACVA. [su_pullquote align=”right”]Resources: NACVA Professional Standards Standards FAQ Library [/su_pullquote] Business valuation/appraisal standards are promulgated by different business appraisal organizations. The NACVA’s Standards Board was formed to continually review the organizations’ standards and to ensure that the NACVA’s Professional Standards remain up to date,…
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Relative to “Those” Competitors Many BVFLS practitioners have a mind-set that presents a self-made obstacle to successfully marketing their professional services. In this article Rod Burkert shares three reasons he has observed that may explain why we, as professionals, struggle with pricing relative to “those” competitors and suggests ways to address those concerns of losing out on price. I want to go on record that I am not immune to price compression. And if I haven’t said that before, I’m saying it now. But if I’ve been more fortunate than others it’s because, in the years after the Great Recession…
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Changing Assignments from Fairness Opinion to Business Valuation Commercial damages matters can be challenging and require a flexible mind when “wrapping your brain” around the issues and facts of a particular case. Beginning in the first quarter of 2019 and running through October 2020, I had an assignment which began with a simple fairness opinion letter and ended with my testifying at trial to defend my valuation of the business. This article will review the changes in my assignment, the decision to value the business, the Daubert challenge brought by the opposing side, and testifying via Zoom at the trial.…
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The Art of Business Valuation: Accurately Valuing a Small Business This is a book review of The Art of Busines Valuation: Accurately Valuing a Small Business. This book is a guide and desk reference for valuing businesses under $10 million in revenues. The primary question answered in the book is: How do we as business valuators, business brokers, accountants, lawyers, owners, and other interested parties prepare, review, evaluate, or use an accurate business valuation for small and very small businesses in a difficult environment? A business valuation is not just a matter of applying techniques, it has to make sense.…
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(Part IV of IV) This is the final article of the four-part series that sets forth best practices for estimating the company-specific risk premium. This discussion of the series summarizes best practices about the analyst’s conduct of the functional analysis as one component in developing the CSRP estimate. [su_pullquote align=”right”]Resources: Best Practices for Estimating the Company-Specific Risk Premium (Part I of IV) Best Practices for Estimating the Company-Specific Risk Premium (Part II of IV) Best Practices for Estimating the Company-Specific Risk Premium (Part III of IV) [/su_pullquote] Introduction Valuation analysts (analysts) often apply income approach business valuation methods to value…
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Briefing on Criminal Fraud Economic Loss Calculations One of the more exciting and challenging parts of our profession is learning about our judicial system. Professionals whose practice involves economic loss calculations should consider educating themselves on the similarities and differences between “actual” and “intended” losses prior to providing expert testimony or offering an opinion. In my research, I came across a publication titled PRIMER Loss Calculations Under §2B1.1.(b)(1) (United States Sentencing Commission, February 2019). I recommend anyone interested in this topic to take the time to read the publication in detail. The purpose of this QuickRead is to educate interested…