Opportunities Available to Drive Revenue and Remain Relevant Q1 2020 is already in the books. If you are thinking about your practice development goals, strategies, and tactics for the rest of the year, Rod Burkert has some ideas regarding what to do and identifies the opportunities associated with five options. Hard to believe that Q1 2020 is already in the books. And you might be thinking about your practice development goals, strategies, and tactics for the rest of the year. What we can achieve (goals) and how we achieve it (strategies and tactics) will be affected by forces that influence…
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Valuing Liabilities Differs from Valuing Assets Valuing contingent/unliquidated liabilities raises some interesting questions. Do contingent/unliquidated liabilities have liability-specific risk? If yes, does liability-specific risk result in lower or higher obligations? Why do contingent/unliquidated liabilities related to lawsuits tend to settle as opposed to go through verdict and appeals? This article addresses these questions. Valuing contingent/unliquidated liabilities raises some interesting questions. Do contingent/unliquidated liabilities have liability-specific risk? If yes, does liability-specific risk result in lower or higher obligations? Why do contingent/unliquidated liabilities related to lawsuits tend to settle as opposed to go through verdict and appeals? This article addresses these questions.…
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Relevance and Alternate Approaches to Succeed Traditionally, accounting and financial services organizations have relied on their firms’ partners to “make it rain” or by using their connections, both personal and professional, along with a sprinkling of charisma, to bring in new business and revenue. How effective is this traditional model in a technology driven world where buyers of services can now access more information than ever to use in their decision-making strategies? Dr. Frederiksen discuss the relevancy of this traditional model. Traditionally, accounting and financial services organizations have relied on their firms’ partners to “make it rain” or by using…
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Get Clients to Count on Your Accounting Is it the valuation of a small privately held company with three employees? Or a large multi-national with employees in the thousands? Perhaps it is reviewing assets in a highly contested divorce. One way or another, you are trying to reach a decision, an opinion, or a conclusion from the data in front of you. Using big data, you must compose a story and present the data in a manner that is compelling and memorable. This article discusses the importance of embracing big data and showcasing one’s expertise. Is it the valuation of…
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Valuation Issues for Wind and Mineral Surface Development Rights As wind energy has emerged as a leading source of energy, several issues have arisen with respect to the rights of parties holding surface and mineral rights. There are important legal issues that need to be explored to assess whether to develop a wind energy farm. This article provides a historical and brief legal overview of the issues. By the mid-19th Century, the effects of the Industrial Revolution had created a need for a cheaper and more convenient fossil fuel than coal: petroleum. Edwin Drake had drilled the first oil well…
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Lost Profits and Loss of Business Value—Differences and Correlation in Terms of the Harmful Impact to Plaintiff’s Claims When a plaintiff suffers, or believes to have suffered, economic damages as a result of a defendant’s actions in a civil matter he/she and their attorney are faced with determining the amount of economic damage suffered. A damages remedy is provided to restore the plaintiff to the same economic position they were in prior to the act. The selection of the appropriate economic damage is a factual one based on various elements including causation and timing. While this may appear relatively straightforward,…
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You Can Do It, Too How should a BVFLS practitioner first engage a prospective client? In this article, the author discusses how he engages prospects and the fee questions. It all starts with a phone call and the much-dreaded question: How much would you charge to value ABC Industries, Inc.? I don’t know … would you like me to guess? I mean, how could I possibly know without more details? For more years than I care to admit, those requests for ballpark fees were gut wrenching … because I believed that if I didn’t throw out a fee estimate quickly…
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What Do the Courts Want? Finding the methodology for determining the appropriate discount rate in a lost profits case can be a convoluted journey. The numerator (the lost profits) may be adjusted through modeling. The denominator (the discount rate) may be a risk-free rate, a rate of return on investments, or the rate of return commensurate with generating the lost profits had no wrongful act occurred. And, whether modeling is used to adjust the lost profits will impact the risk premia that affects the discount rate. Experts must review the facts of each assignment and apply an approach which they…
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On the Valuation of Small Businesses What is the impact of coronavirus on small businesses? What should valuation analysts consider in light of the stock market downfall when valuing a small business. The author shares his thoughts on the impact of coronavirus when valuing small businesses. The coronavirus pandemic is wrecking havoc on the global economy as we have seen last week with the stock market crash that compares to what we saw in 2008 during the financial crisis. Many businesses, big and small, have lost an incredible amount of money last week alone. And may still lose more in…
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In Related-Party Cost Sharing Arrangements (Part II of II) This two-part paper demonstrates how the discount rate associated with the investment in intangibles developed under a cost sharing arrangement can be calculated using an analytical framework that explicitly considers variability of outcomes in profitability of the intangibles to be developed. Such framework is the probability-weighted scenario analysis. The method of calculating discount rates using the scenario analysis can be applied to compute the PCT payment under both the “income method” and the “residual profit split method” described in the U.S. transfer pricing regulations. The same method also allows to calculate…
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New Study Spotlights Five Proven Strategies There is an easy way to identify the most effective strategies for rapid growth. For the fifth year in a row, the Hinge Research Institute conducted a comprehensive study of more than 1,000 professional services firms. Specifically, Hinge looked at what “high-growth” firms (those with at least three years of 20% compound annual growth) do differently than firms that are not growing at all. This article highlights five proven growth strategies. Professional services firms face many new challenges, from talent shortages and changes in buyer behavior to the impact of technology and automation—and…
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Observations of Needs of Boomer Owners as the Exit Tsunami Begins Readers serving as advisors to privately held business owners stand in the position of being the authority when it comes to topics such as growth and exit planning. This QuickRead article is written to share the research on the privately held business owner market and mindset, which points to important considerations for business owners who are considering and/or executing upon a plan to grow and/or exit their privately held business. The article covers five important issues that will enable advisors to understand the opportunity in this market, an opportunity…
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The Art and Science Most businesses have special characteristics that affect its value. Some are endemic to the industry and some relate to the personal nature of those managing the business. Wealth management businesses have both characteristics. Here are some considerations that go into determining the valuation. Most businesses have special characteristics that affect its value. Some are endemic to the industry and some relate to the personal nature of those managing the business. Wealth management businesses have both characteristics. Here are some considerations that go into determining the valuation. Defining a Wealth Management Business Wealth management businesses manage investible…
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To Attract or Retain Key Employees To both attract and retain key employees, many private companies have added stock-based compensation grants to their portfolio of employee compensation arrangements. An important component of any private company stock-based compensation arrangement is the value of the private company stock. Therefore, private company clients expect valuation analysts to be at least generally familiar with the management considerations related to such stock-based compensation programs. This discussion summarizes some of the basic—but important—income tax considerations about the compensatory transfer of employer corporation stock. This discussion summarizes both the employer’s and the employee’s federal income tax considerations…
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Asset Values (Part III of III) This is the third of a three-part article that focuses on valuing nonprofit corporation assets. Valuation analysts are commonly engaged to provide fair market value guidance related to nonprofit business transactions. Nonprofit businesses are often involved in arms-length transactions. Common transactions include royalty payments for the use of intellectual property, royalty revenue earned by licensing intellectual property, sales of assets, and purchases of assets. If the subject transaction is between a nonprofit and a related party, the transaction is required to be a fair market value transaction. This series provides an example of certain…
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Get New Work at Fees I Can Live With When it comes to getting new work, one of the required steps is writing what amounts to a combined proposal/engagement letter. It’s more of a proposal if you’re assuming what the prospect wants; it’s more of an engagement letter if you spend time finding out what the prospect needs. But semantics aside, preparing these letters is a lot of work. Given that, what is your proposal win percentage? Are you content with your fees on the proposals you win? If your answer is “no” or “not always,” this article may help.…
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Asset Values (Part II of III) This is the second of a three-part article that focuses on valuing nonprofit corporation assets. Valuation analysts are commonly engaged to provide fair market value guidance related to nonprofit business transactions. Nonprofit businesses are often involved in arms-length transactions. Common transactions include royalty payments for the use of intellectual property, royalty revenue earned by licensing intellectual property, sales of assets, and purchases of assets. If the subject transaction is between a nonprofit and a related party, the transaction is required to be a fair market value transaction. This series provides an example of certain…
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Nine Steps to Engage Your Audience Hinge’s latest research on high-growth accounting and financial services firms makes the case that your firm should consider adding educational webinars into your marketing mix. Hinge’s latest research on high-growth accounting and financial services firms makes the case that your firm should consider adding educational webinars into your marketing mix. Why? Well only 34.9% of these firms reported that they conducted webinars last year—and it seems that for those who did, they were worth the effort. In terms of perceived impact, conducting educational webinars was the third most impactful marketing technique used in this…
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Asset Values (Part I of III) This is a three-part article that focuses on valuing nonprofit corporation assets. Valuation analysts are commonly engaged to provide fair market value guidance related to nonprofit business transactions. Nonprofit businesses are often involved in arms-length transactions. Common transactions include royalty payments for the use of intellectual property, royalty revenue earned by licensing intellectual property, sales of assets, and purchases of assets. If the subject transaction is between a nonprofit and a related party, the transaction is required to be a fair market value transaction. This series provides an example of certain steps and procedures…
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For 2020 and Beyond Merriam-Webster dictionary defines blockchain as a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network. In this article, the author predicts blockchain trends and its impacts of the accounting profession. With a new year comes changes across multiple facets of the accounting vertical, and there has arguably been no trend and tool that has dominated the accounting conversation more than blockchain technology and its applications. Since its launch from obscurity to the mainstream business and accounting conversation, blockchain and its applications—including…