How (Use of) the Unknown Will Kill You On November 17, 2021, Jim Hitchner presented “How to Attack and Defend the Databases Used by Valuation Analysts”. The presentation raised the following questions: Have you ever been cross-examined by an attorney who is more familiar than you with databases referenced in the valuation report? When was the last time, if ever, that you reviewed and studied the methodology ...

What You Should Know About Them The world as we know it is rapidly changing and the COVID-19 crisis has accelerated the pace of that change. Some experts estimate the pandemic advanced the digital transformation timeline by seven years. These changes have opened many new opportunities for cybercriminals who have adeptly exploited these vulnerabilities. This article will summarize the trends that have create ...

Ask the Right Questions to Elicit the Information Needed for the Story Those that cross-examine and have been cross-examined understand that the questions are intended to elicit information or develop a story that fits their client’s version of events. There is a strategy and, in this article, the author shares how that is accomplished. So, what is the big deal about asking questions? You just say, "Why did ...

Analysts Caveats and Reporting Guidelines (Part V of V) This fifth and final installment presents valuation analyst caveats and reporting best practices related to the intellectual property valuation. Intellectual Property Valuations: The Relief from Royalty Method (Part I of V) Intellectual Property Valuations: Elements of the Valuation Analysis (Part II of V) Intellectual Property Valuations: Application ...

A Fair Payout or a Disaster Waiting to Happen In 2020 alone, approximately 7,300 companies filed for Chapter 11 bankruptcy. Of those corporate debtors, 42 were found to have awarded pre-bankruptcy retention bonuses to a total of 223 executives, with the bonuses totaling approximately $165 million. These pre-bankruptcy bonuses were given to executives anywhere from five months to two days before the filing. ...

Illustrative Example of the Relief from Royalty Method (Part IV of V) Previous installments of this five-part discussion summarized the development of the market approach and the relief from royalty (RFR) method of intellectual property valuation. This fourth installment presents an illustrative example of the practical application of the RFR method. [su_pullquote align="right"] Intellectual Property Valuat ...

A Transition Planning Tool Kit This is an abridged article published by the author. The original article is longer and contains forms referenced but not included here. The author has prepared a tool kit to assist sole practitioners and smaller partnerships with a method of having their practice sold or continued in the event of an untimely death or disability. This tool kit has been prepared to assist sole ...

Application of the Relief from Royalty Method (Part III of V) This is the third article of a five-part series on valuation of intellectual property describing the application of the RFR method. Intellectual Property Valuations: The Relief from Royalty Method (Part I of V) Intellectual Property Valuations: Elements of the Valuation Analysis (Part II of V) Introduction This five-part discussion focuses on the ...

Anecdotes from James R. Hitcher of Moments Spent with Dr. Shannon P. Pratt, a Pioneer in the Business Valuation Industry This discourse shares the author’s long, rewarding relationship with Dr. Shannon P. Pratt, an icon in business valuation (BV). He lived and breathed BV. Outside of his career, he had an intense love of life and liked to have fun. The author, James R. Hitchner, shares what he learned from ...

Elements of the Valuation Analysis (Part II of V) This second article of the five-part series on Intellectual Property Valuations summarizes the typical elements of the intellectual property valuation analysis. This part of the discussion focuses on benchmarking and the use of research databases. [su_pullquote align="right"]Resources:Intellectual Property Valuations: The Relief from Royalty Method (Part I o ...

Rather than reacting to developments on Monday, take action earlier to jumpstart the week. In this article, Rod Burkert shares five things he does to remain active and plan the week ahead. Our RV travels cause us to keep some pretty weird hours. But one thing I never alter is how I prep for the coming week. I’m a fussy to-do list maker. And a meticulous scheduling planner. These two habits intersect every S ...

The Relief From Royalty Method (Part I of V) This is the first article of a five-part series that focuses on what valuation analysts and owner/operators need to know about one category of intangible property: intellectual property. There are generally accepted cost approach, market approach, and income approach methods that may be used to value intellectual property. This discussion focuses on the applicati ...

To Create a Visual Picture Every profession has its own unique vocabulary, and although everyone in the field understands the terms or abbreviations, the public most likely does not. An easy way to help people understand technical terms or a profession's distinctive vocabulary is to create a “word picture” that links that unique word to some everyday idea or object. The author suggests that metaphors and si ...

Preserving a Legacy In this article, Roger J. Grabowski, FASA, shares with readers a personal story regarding his friendship. The forthcoming 6th edition is a tribute to Dr. Pratt, a close friend and leader of the profession. [su_pullquote align="right"]Tribute to Shannon Pratt[/su_pullquote] Introduction I am fortunate to have co-authored several books with Shannon. While I had gotten to know Shannon throu ...

A Unique Take on Causation Experts are becoming aware of how the COVID-19 pandemic has affected lost profit analyses that include 2020 and 2021. The pandemic and the slow recovery have created separate causations which may or may not become the proximate cause of a damaged business’ loss. For this reason, the effects of COVID-19 must be considered as an alternative causation to lost profits. The lockdowns a ...

The Pursuit of Equitable Relief, Separation of Liability, and/or Innocent Spouse Relief The consideration of innocent spouse relief, separation of liability, and equitable relief remedies are important to understand and consider for the purposes for which they were created. This article presents the different options and when one option may be more fitting than another and the relief accorded under each. Th ...

We sometime make decisions that seem right, but in hindsight, we wonder what we were thinking at the time. Over committing is exhausting. In this article, Rod Burkert shares his thoughts on how to get back on track and focus on the main priorities. I don’t know about you, but sometimes I look at an event on my schedule and think: Why did I agree to do this/write that/be there? I’m sure it made sense at the ...

In this article, the author shares with readers that a number of practitioners expect a slow 2022; this is a departure from the current work frenzy. He shares his advice regarding what to do in anticipation of that fear. I have been talking to many of my colleagues lately—mainly, those who specialize in tax purpose valuations. Collectively, they have been, and they are up to their a$$es in alligators—result ...

Avoiding the Chaos and Selecting the Proper Methodology Over the past 20 years, business valuation analysts (and the courts) have debated whether there is an S corporation premium vis-à-vis the C corporation. This debate has led to the profusion of models and confusion. Four predominant models currently in use include: the Fannon, Delaware MRI, Van Vleet’s SEAM, and Treharne Model. Each of these models make ...

Part IV: Illustrative Examples Part I of this series discussed the conceptual foundations of the cost approach to intellectual property valuation. Part II described the generally accepted valuation methods within the cost approach to intellectual property valuation. Part III presented the practical measurement procedures in the application of the cost approach. In this final installment of this series, Part ...