In this second part of a two-part series, the authors discuss why and when the highest and best use standard should apply. ...

AIRA Issues New Standards for Distressed Business Valuation In 2004, The Association of Insolvency & Restructuring Advisors (AIRA) launched the Certification in Distressed Business Valuation (CDBV). Before the inception of the CDBV program, there was no professional designation to recognize those skilled and experienced in distressed business valuation work or expert valuation testimony in bankruptcy li ...

Part II: Nine Additional Reasons a Valuation Is Needed in Chapter 11 This second part of the article focuses on the remaining nine reasons a valuation of IP is necessary in a Chapter 11. ...

Traditional valuation methodologies have relied upon the analysis of historical accounting and other data as predictive of future performance and value. However, this may not hold true with every economy, industry, or even every enterprise within an industry, over time. For example, the turbulent status of the healthcare industry over the last five decades, since the passage of Medicare in the 1960s, has in ...

Part I: Three of the 12 Reasons a Valuation Is Needed in Chapter 7, 9, and 11 This two-part article summarizes the various types of intellectual property that valuation analysts (“analysts”) may encounter within a commercial bankruptcy controversy, lists the generally accepted intellectual property valuation approaches, and presents the reasons why analysts may be asked to value intellectual property within ...

Part 1: Find Industry and Location-Specific Data Courts standards require that damages analysis results be within “reasonable certainty”, and objective rather than speculative. And while the terms “reasonable certainty” and “speculative” are more terms of art than science, given these standards, it is of vital importance to analyze all relevant factors to the extent permitted by the best data available. And ...

The Myth of Efficient Market Cramdown Rate In December 2014, the American Bankruptcy Institute issued its Final Report and Recommendations of the Commission to Study the Reform of Chapter 11. The Commission was comprised of 22 professionals. The group included attorneys, academics, financial advisers, and a former bankruptcy judge. After over two years of work, the Commission made more than 200 recommendati ...

A Primer on the Approaches and Issues Involved in Valuing Trademarks Valuation analysts are often called on to perform valuation, damages, and transfer price analyses of trademark-related intangible property for various purposes. This discussion describes the valuation of trademarks within the context of both financial accounting and income tax accounting (in particular, tax-related intercompany transfer pr ...

Business owners contemplating retirement should obtain a business valuation to determine the value of the business and whether the other resources will provide financial security. The conversation and successful engagement also requires that the valuation analyst understand the owner’s motivating factors, or the qualitative information. Obtaining the right price is important, but holding out for a larger va ...

Merger and acquisition activity in the healthcare industry has increased over the past few years. The playbook used in the past has shifted. In this article the authors share their views on whether and when to announce the deal, the importance of conducting pre-deal due diligence, appearing before the Board of Directors, understanding the constituents that are needed to succeed, and conducting pre-market du ...

and the Process for the Valuation of a Closely Held Business (Part 1 of 2) Assessing shareholder value for either publicly held or privately held companies are two sides of the same coin. The U.S. capital markets have undergone significant changes in the past several years. This development in turn has had an impact on how these two types of companies are valued. Valuing public companies can be rather strai ...

Modeling Uncertainty to Gain Better Insight and Create Value Gary Lynch, founder and CEO of The Risk Management Project, proposes that uncertainty is the new normal and that firms that espouse risk management can create and preserve value. In this article, Lynch describes how his firm used quantitative models to assist a manufacturer assess how it should respond to a competitor’s price-reduction strategy an ...

The proper usage of company management-prepared projections when applying the Income Approach—Discounted Cash Flow Method—is an ongoing issue for any valuation analyst, especially as it relates to shareholder appraisal rights actions. The Delaware Chancery Court regularly provides guidance as to the proper usage of management projections when applying the Discounted Cash Flow Method within a dissenting shar ...

In this article, Peter Rahe describes how he presents the subject of market multiples to attorneys. He also raises important questions about business valuation multiples. ...

A Case Study An ESOP is one of many options available to business owners considering succession-planning options. There are substantial advantages, but there are also regulatory and cost considerations. A feasibility study may suggest whether the ESOP is an appropriate option. In this article, authors Kelly Finnell and Andrew Holmes share their views on when an ESOP is feasible using a case study. ...

A Drop-Dead Plan for the Unprepared In this article, Edward Mendlowitz shares his views regarding the importance of having a buy-sell agreement. He proposes a “drop-dead plan” or method that, while imperfect, addresses how owners can arrive at an initial value that does not necessarily require a Conclusion of Value, especially if the owners are not related. Significantly, Mendlowitz stresses the importance ...

Simple Steps to Save Hundreds of Thousands of Dollars By implementing just a few simple steps and procedures, business owners can catch or prevent financial fraud that can have devastating financial and personal consequences. In this article, Chris Hamilton outlines six simple steps business owners can put into practice today. ...

Evolving Accounting Standards for CPAs Wiley author Joanne Flood reviews three significant Accounting Standards Updates (ASU).  First, she reviews ASU 2014–08, issued in April 2014. This ASU focuses on Reporting [for] Discontinued Operations.  This ASU changes the criteria for determining which disposals can be presented as discontinued operations.  In the remaining portion of the article, she summarizes ch ...

Ninth Circuit Court of Appeals Reverses U.S. Tax Court On December 5, 2014, the Ninth Circuit Court of Appeals “reversed and remanded for recalculation of value” a Tax Court Memo decision in Estate of Natale B. Giustina, Deceased, v. Commissioner (No. 12-71747). The case involves the valuation of a 41.128 percent partnership interest in Giustina Land and Timber Company Limited Partnership and raises importa ...

A Case Study, Part 2 of 2 In this second part of the article, Dr. Allyn Needham examines post-Till cases from the northern and western districts of Texas, highlights the problems encountered using the Formula Approach, and tests whether the Contract Approach may have provided a better approach and reduced the incidence of litigation where a cramdown is proposed. Ultimately, Dr. Needham proposes that despite ...