Valuators play different roles depending on client needs When individuals enter into business transactions, they seek the assistance of a valuation expert to support their decision-making process. Depending on the circumstances and specific needs of the individual, a valuator may find that a business valuation isn’t really what the client needs. Often times, valuators will find themselves on a different ass ...

Will the valuation report prepared by the non-accredited CPA be admitted? The author was recently involved in an Oklahoma domestic relations case where the opposing expert contended he did not have to abide by AICPA standards, reporting or otherwise, since he was not a member of the organization. This article summarizes how this issue was handled by the Oklahoma judge. ...

Continued consolidations among healthcare providers and suppliers  David Jasmund examines the effect the Affordable Care Act (ACA) is having on mergers and acquisitions across the healthcare service and supply sector. Using Third Quarter data, Jasmund displays where the opportunities and challenges are occurring within the overall industry. ...

According to data presented by McKinsey & Company and reported by Bloomberg.com, up to 20 percent of the world’s largest banks may be broken up or merge as part of a correction strategy to boost shareholder returns.  As banks refine their focus on products and regions, the number of global, universal banks may drop from 25 to less than 10.  In 2012, global banks earned an 8.6 percent return on equity, w ...

While the idea of beating the market is more suited to the financial investment sector, McKinsey & Company recently applied some of the same principles to business strategy.  In a review of 3,000 large nonfinancial companies, this overview examines the players that avoid profit depletion and maximize value creation, even during economic downturns.  Tried and true business practices are tested as the num ...

Earn-out provisions require careful planning This article examines the challenges surrounding earnout provisions, particularly when the subject entity has a short history, but high growth potential, such as in untested technology. Carefully constructed earnout contingencies may help alleviate disagreements between the transaction parties and avoid valuation disparities in the process. ...

A summary of recent federal and state court cases involving final partner administrative adjustments, mergers, and matrimonial law This month we highlight four cases.  The first is Rovakat, a federal appellate court decision where a claimed redemption was deemed a sale of stock. The In re MFW Shareholder Litigation case involves a motion for summary judgment where a majority of the minority shareholders app ...

How the ACA impacts the valuation of physician-owned hospitals Nick Janiga and David Walline of HealthCare Appraisers, Inc. (HAI) examine how the Affordable Care Act (ACA) affects the valuation of physician-owned hospitals and what the future holds for the 240 such medical institutions across the country. ...

How long will it last? Dividend recapitalizations provide a mechanism for owners, including private equity firms, to return capital to them (the investors) in lieu of an outright sale. The article discusses trends, the reasons for recapitalizing, and suggests what characteristics to look for when considering this technique. ...

The AICPA has published a comprehensive overview in The Tax Advisor that examines IRS oversight of CPAs who provide valuation services.  Special emphasis is placed on Sec. 6695A, which imposes large penalties for substantial valuation misstatements, and the reason the IRS has increased its involvement in appraisal issues.  The IRS Appraisal Review Process is examined, as well as specific actions that may be ...

In Friedberg v. Commissioner, the Tax Court rejected the claim by the IRS that the appraisal submitted by the taxpayer was not qualified because it wasn’t reliable, and improperly applied the methodology to value a property.  In the Tax Court’s ruling, it stated that the appraisal was “qualified” as defined in Treasury Regulation 1.170A-13(c)(3) and rejected the IRS’s attempt to disqualify the appraiser.  I ...

A different perspective on profit and performance Balanced benchmarking provides a mechanism by which to assess and manage business branches and units. It also provides a unique insight as to the available paths to improve productivity and complements other analytical tools. The combined effect is that its use provides insight into best practices and ways to improve productivity. ...

More on the neutral business valuator and the mediation process This article, by one of the top national leaders in the mediation profession, discusses the importance of having reliable facts to expedite the settlement of conflicts where the value of a business is a key factor. ...

Increased Scrutiny for ESOP Fiduciaries This article presents a case for higher scrutiny for ESOPs as well as their fiduciaries. By juxtaposing protocol with proverbs from Aesop’s fables, valuable lessons are learned for business and life. ...

Reality TV offers more than entertainment Reality turnaround TV shows provide valuators lessons that go a long way toward improving their consulting and valuation skills, and client deliverable. Those lessons could result in more opportunities and greater credibility. ...

In a letter to the FASB and IASB, the AICPA’s Financial Reporting Executive Committee (FinREC) suggested that a dividing line be created between Type A and Type B leases that deviates from the rule the boards have proposed.  While FinREC supported the objectives calling for transparency and recognition on-balance sheet for all leases, it disagreed with the test for how leases would be classified.  For detai ...

In a brief but revealing article by the Wall Street Journal, auditors at the seven largest accounting firms in the U.S. were cited for deficiencies found in 37.5 percent of the audits inspected by regulators.  The vast majority of the deficiencies involved evaluation of the market prices companies supplied for complex assets.  Citations were also made for failure to test managers’ assertions about the metho ...

Healthcare consulting in an era of reform Part 2 In Part 1 of this article, the impact of healthcare reform on the opportunities for healthcare consulting was discussed.  In Part 2, methods utilized by healthcare consultants, as well as the phases of a typical healthcare consulting engagement, are discussed. ...

Getting ready for your day in court Part 1 of Preparing for Expert Witness Testimony was published in QuickRead in August 2013.  The article dealt primarily with the importance of effective engagement letters and information gathering in the expert witness preparation process.  It would behoove readers to revisit  Part 1 to receive the full value of the expert witness process.  ...

Wandry v. Commissioner In certain cases, formula-driven, gift-giving plans have proved to be successful. In other cases, they have not. What characteristics differentiate a formula gift-giving plan that can withstand the Internal Revenue Service (the “service”) scrutiny and be upheld in Tax Court from a plan that gets defeated?  The Wandry decision1 provides insight into these questions and highlights issue ...