How to Implement Value Pricing in Your Firm In this second article of the three-part series, Ronald J. Baker challenges professionals to move from value billing to value pricing. Value pricing inverts the hourly billing model by recognizing the economic facts that it is the customer who is the ultimate arbiter of value. If value is created, the customer understands that cost is secondary.
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Fifth Circuit Affirms District Court and $83 Million in Unpaid Taxes and Interest Owed by Donees The Fifth Circuit recently affirmed the district court’s decision and the imposition of unpaid taxes and interest on donees of shares sold at less than fair market value to the company owed by relatives of the donor. As Joe Brophy explains, this case illustrates the pitfalls of deathbed planning involving asset transfers below market value.
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In this article, Robert Cimasi and Matthew Wagner provide a roadmap of the valuation and legal issues valuation professionals confront valuing a medical practice that also provides ancillary and technical component (ASTC) services. The fact that the ASTC services are often integrated with the professional services of a practice does not restrict the ASTC service line from having value separate and aside from that of the practice enterprise. The authors share their views on how to value the hypothetical “carve-out” ASTC, including what approaches to consider.
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In this first of a three-part article, Ronald Baker challenges professionals to rethink how they market and price professional services. He reminds us that “[c]ustomers buy value, not hours.” Many practitioners and firms are locked into the current pricing myopia of hourly billing, which prevents professionals from getting paid what their customers believe they are worth. In this first article, Mr. Baker offers some compelling reasons why professionals should make the switch from hourly billing to value pricing.
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In a recent valuation, Apple has been crowned the most valuable company on the planet, and second place wasn’t even close. After its stock hit a record high recently, Apple was valued at $700 billion. That’s $300 billion more than the runner-up, Exxon Mobile. It’s hard to wrap your head around these kinds of numbers, but imagine the enormity that is Google. Even with that kind of influence, Google is still worth only half as much as Apple. When CEO, Tim Cook, took the company’s reins from the late Steve Jobs, many were in doubt as to whether the…
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Revenues in veterinary practices continue to climb, but profitability has fallen. The supply-demand currently favoring sellers is about to change, and that is expected to impact sellers. These practices have options—other than selling to a consolidator—and will remain attractive to associates; however, vet practices will need to be proactive to control costs to command a better price.
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At some point in a business valuation analyst’s career, an attorney or pro se party will call asking for a business valuation and perhaps even to retain your services. A good starting point is Business Valuation in Divorce: Case Law Compendium, 2nd ed. This edition is 584 pages long and provides a comprehensive court case digest that emphasizes similarities and differences in the treatment of goodwill (professional and personal), discounts, fair value, tax-affecting, and other significant issues. This is a must-have resource for those already practicing in this area and for those embarking in their valuation career.
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While the Comcast/Time-Warner merger is pending with the FCC, another mega deal has fizzled out. Toy giant Hasbro got cold feet in its $3 billion bid for DreamWorks Entertainment after its stock slid five percent after investors deemed the price way too high. Not to worry though, a new report from Ernst & Young showed 40 percent of media executives surveyed said they expected to make a buy sometime in the next 12 months. If the deals come to fruition, that would be the highest M&A rate for the media sector in three years, although one expert expects most…
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The NFL is the nation’s largest sports franchise, generating nearly $10 billion per year. What most people don’t know is that it’s also a nonprofit organization. Even at that level of income, the NFL is a 501(c)(6) “business league” organization where the vast majority of its earnings trickle down to its 32 teams, which includes the Washington Redskins. Recently, Eleanor Holmes Norton, Washington DC’s non-voting congressional delegate, introduced a bill in the House of Representatives to strip the NFL of its tax-exempt status because it promotes a “racial slur for profitable gain.” Meanwhile, a companion bill to accomplish the…
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Lessons to be learned by Valuators from Cavallaro v. Commissioner Cavallaro v. Commissioner holds some valuable lessons for valuation experts. Following a tax-free merger of two companies owned between different family members, the children of the petitioners (and owners of one of the companies, pre-merger) received 81 percent of the stock in the merged entity. Differences arose between one set of accountants and Hale & Dorr, the law firm that assisted the founders with estate planning. The key issue was whether valuable technology was owned by the company controlled by the parents or the company owned by the children. The…
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An Interview with Nancy J. Fannon and Jonathan M. Dunitz Nancy J. Fannon and Jonathan M. Dunitz co-edited The Comprehensive Guide to Lost Profits and Other Commercial Damages. In this interview, Fannon and Dunitz discuss the new edition and share their insights into the practice of lost profits and damages.
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Five years ago, no one really knew what big data was and now, it seems it’s all anyone can talk about. Big data is the term used for information retailers, government agencies, and other organizations collect from the public that other entities might have a vested interest in purchasing because they produce ancillary products or services that could be marketed to the same individuals. While there has been much concern regarding big data the government collects and its impact on privacy, it’s becoming much more of a concern in the valuation world. Are these datasets assets? Some are valued in…
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Merging with or acquiring another company isn’t just about consuming or becoming bigger than the competition. In an in-depth article with ABF Journal, Phil Isom and Dan Tiemann of KPMG outline the deals their organization has pursued in the last 12 months and the strategies behind them. The authors detail how M&A can and should be used as a growth strategy with an eye on bringing new talent, tools, and resources into a company. Some deals are made to remain in sync with global trends and retain a competitive edge. It’s not always about the money, at least not…
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Issues in Hedge Fund Valuations The proliferation of hedge funds presents an opportunity for valuation analysts. In this article, the author provides an overview of the hedge fund industry, compares the manner in which hedge funds operate vis-à-vis private equity and venture capital, and outlines the opportunities and challenges for valuation analysts interested in serving this market sector.
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How the Trademark Trial and Appeal Board’s Cancellation of a Historic Mark Impacts Brand Value and the NFL On June 18, 2014, the Trademark Trial and Appeal Board canceled the federal registration for six Redskins trademarks. In this article, the authors discuss the impact that the cancellation of the trademark may have on the brand, NFL’s revenue sharing, and the value of the Redskins franchise. The authors also outline the options available to the Redskins’ team owner.
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Back in 2007, the IRS and U.S. Department of Justice (DOJ) were hot on the heels of Switzerland-based mega financial institutions like UBS, Credit Suisse, and Wegelin for assisting wealthy Americans in hiding billions of dollars in foreign accounts. Part of the fallout included the enactment of the Foreign Account Tax Compliance Act (FATCA) in 2010, which requires all foreign banks to file reports with the IRS on all American accounts over $50,000. Americans must also file the disclosure separately on their yearly returns. Failure to report results in a 40 percent penalty for the account holder and even…
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Recognizing Hindsight and Projection Bias How can one expert opine that the company is insolvent and another expert—viewing the same financial statement—opine that the company is solvent? In this article, Michael Vitti answers this question and provides an overview of what is considered a preference and a fraudulent transfer.
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So, You Want to Become a Venture Capitalist? In this article, Edward Mofrad shares his views on what it takes to become a successful venture capitalist.
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The IRS has released the annual inflation adjustments for a number of provisions for tax year 2015, including tax rate schedules, tax tables, and cost of living adjustments for some items. In total, the IRS posted more than 40 updates. You can read them in full here. You can also find an excellent overview of all the changes at Forbes.com through the link below. [button color=”blue” link=”http://www.forbes.com/sites/kellyphillipserb/2014/10/30/irs-announces-2015-tax-brackets-standard-deduction-amounts-and-more/” target=”_blank” font=”arial” align=”left”]Read More[/button]
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With just six more weeks to go until 2015 is rung in, small business owners and managers can take simple steps now to minimize their tax bill next April, according to business advisory services firm Skoda Minotti. Below are five ideas small business owners and managers can consider from now until December 31: Make those needed office or plant repairs. For the most part, expenses for minor business premises repairs are currently deductible. Keep an eye on equipment purchases. Currently, the maximum Section 179 allowance made for qualified property placed in service remains at $25,000 versus $500,000 in 2013.…