Finding the Culprits Whatever happened to the expected post-acquisition income? The author identifies the potential culprits. One of my favorite games as a kid was the murder-mystery classic Clue. How many of you remember trying to deduce the culprit, the murder weapon and the room in which the attack took place? “I think it was Colonel Mustard in the kitchen with the candlestick.” “I think it was Mrs. Peacock in the hall with the knife.” “I think it was Mrs. White in the billiard room with the lead pipe.” Clue was a great “whodunit” game in which players had to…
-
-
The Use of Common Sense and Experience The acceptance of tools such as Monte Carlo simulation and Option Pricing models has changed our ability to value options, warrants, and derivative instruments. The list goes on and on. However, as many of us are fond of saying, valuation is as much an art as it is a science. Many of our tools address the science, not so many of them address the art. In my opinion, one of the most underutilized tools that addresses the art side, may in fact be our own common sense. “Common sense is not so common.”-Voltaire…
-
Avoid Traps with a Timely Appraisal New basis-consistency requirements make defensible valuations of inherited property even more important. Informed taxpayers are aware that only the wealthiest individuals should have concerns about the federal estate and gift tax, for gifts given and decedents dying in 2018 through 2025. Thanks to the legislation known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, the basic exclusion amount is more than $11 million per individual ($22 million for married couples), indexed for inflation. Now, estate planners are spending less time and using fewer resources trying to avoid federal estate taxes for clients.…
-
Consider Michael Jackson, the Empire State Building, and Myriad of Value Drivers (Part II of II) In this concluding article, the second of a two-part series, the authors conclude presenting additional illustrations that underscore their primary thesis: that in many businesses, value is illusory and there are a host of factors that are unanticipated and cannot be modeled. In this concluding article, the second of a two-part series, the authors conclude presenting additional illustrations that underscore their primary thesis: that in many businesses, value is illusory and there are a host of factors that are unanticipated and cannot be modeled.…
-
Options that Provide Superior Results Compared to Renting Marketers of accounting and valuation firms have long used e-mail marketing to nurture new and existing prospects. But what is the best way to develop a good list in the first place? This article provides seven proven strategies for building your firm’s e-mail list faster. Marketers of accounting and valuation firms have long used e-mail marketing to nurture new and existing prospects. But what is the best way to develop a good list in the first place? Here are seven proven strategies for building your e-mail list faster. More digital marketing tips…
-
Everything is Changing (Part I of II) In this two-part article, the authors present some illustrations that indicate the illusion of value of many businesses. Business appraisers have many tools to determine the value of a closely held business. So many so, that many “official” conclusions of value for the same business generate significant differences. This borne out by the normal expectation of rebuttal reports in marital and shareholder disputes, tax litigation over estate, gift and charity values of family businesses, and fair value situations. In some instances, there are multiple valuations. Many valuations are prepared to fulfill a purpose…
-
Private Equity’s Fast and Furious Entry into Healthcare (Part III of III) The third of this three-part series examines why private equity and venture capital firms are targeting the healthcare industry and the issues that they encounter managing their healthcare portfolio. Private equity (PE) and venture capital (VC) firms are attracted by the potential for growth that exists in the healthcare industry; however, significant barriers also exist that may limit the expansion of PE and VC in healthcare, including the requirement for specialized knowledge to understand the operations of a clinical services provider, healthcare industry specific regulatory issues, latent long…
-
Of a Successful Negotiation It does not matter if you are going to be involved in direct negotiations or negotiating a settlement during mediation, the key is to determine the answers to five critical questions. In this article, Nancy Neal Yeend shares the five critical questions and answers that must be addressed to successfully negotiate. It does not matter if you are going to be involved in direct negotiations or negotiating a settlement during mediation, the key is to determine the answers to five critical questions: Who will attend the negotiations? What is the extent of their settlement authority? How…
-
Attaining Reasonable Certainty in Economic Damages Calculations (Part III of III) The purpose of this article—the third of three (Part I and Part II) on this topic—is to provide the reader with an understanding of Chapter 3 (What Constitutes Best Evidence) of the 2018 Practice Aid as well as certain other publications containing a body of knowledge on the best evidence to support economic damages in a court of law. Prior articles dealt with Chapter 1 (Revenue and Growth Rates) and Chapter 2 (Costs) of the 2018 Practice Aid and related topics. In 2015, the American Institute of CPAs (AICPA)…
-
Full-Time Mother and the Firm Perspective (Part II of II) This article is a follow-up article to an earlier article written by Laura Whitman, CPA, MS, manager, WithumSmith+Brown, PC titled Part-Time Accountant; Full-Time Mother. In this article, Edward Mendlowitz, CPA, ABV, CFF, interviews John Mortenson, CPA, partner in charge of the Withum East Brunswick, NJ office who interviewed Laura Whitman regarding how she managed her roles and how this impacted the firm. Follow-up to article by Laura Whitman, CPA, MS, manager, WithumSmith+Brown, PC, titled Part-Time Accountant; Full-Time Mother. Interview with John Mortenson, CPA, partner in charge of East Brunswick, NJ…
-
For Prospects and Clients to Work With You One of the easy-to-implement practice development tips proposed by the author, who coaches, is this: If you are looking to build/grow your practice, start by making just one thing easier for your prospects and clients to use or understand. Identify something they do, read, or experience and answer this question: How could I make that easier? In this article, four courses of action are presented. One of the easy-to-implement practice development tips I talk about with coaching clients is this: If you’re looking to build/grow your practice, start by making just one…
-
Meet Skynet … Your Professional Role is About to Change! What is Artificial Intelligence (AI)? How will AI impact the way we work? Serve our clients? In this article, the author explains what AI is and how the evolving technology will impact our professional practice. The goal of artificial intelligence (AI) in the computer science world is to create human intelligence demonstrated by machines. Once this human intelligence is demonstrated, AI programs would then be able to perform a variety of tasks that, until now, were only done by human beings. AI and the promise of intelligent computers has long…
-
Full-Time Mother (Part I of II) Striking a work-life balance is difficult. Are there solutions and an upside to firms committed to retaining the investment made developing professionals? This article was originally written in 2013 for the Withum Journal where Laura Whitman shares her perspective. The article has been updated to reflect events that occurred since it was originally published. This article was then addressed from the firm’s vantage point by John Mortenson, the partner in charge of the Withum East Brunswick, NJ office in an interview by Edward Mendlowitz, a partner in that office. This article was originally written…
-
Ownership Interests in Privately Held Companies This article focuses on concepts and issues that are important for family law attorneys to understand when navigating cases that involve divorcing clients with ownership interests in privately-held entities. One of the first questions that arises is whether we need to retain a valuation expert? This is an important question, where experts can provide attorneys and the parties important guidance and address expectations, preferably early in this emotional process. [su_pullquote align=”right”]Resources: Corporate Divorce Litigation—Understanding its Dynamics and Formulating Solutions Resolving Family Law Disputes The Power of Neutrality in Resolving Family Law Disputes Valuation Issues…
-
Implement Your Content Marketing Strategy To successfully implement a content marketing plan to support your firm’s overall marketing goals, you need to build an editorial calendar. In a solid, well-planned editorial calendar, everything is planned out in advance, from scheduling to headlines. In this post, Dr. Lee Frederiksen shares some tips for creating an editorial calendar. To successfully implement a content marketing plan to support your firm’s overall marketing goals, you need to build and editorial calendar. In a solid, well-planned editorial calendar, everything is planned out in advance, from scheduling to headlines. In this post, I will share some…
-
Fair Market Value Considerations (Part II of II) The first of this two-part series reviewed the unique value drivers that impact the typical valuation approaches, methods, and techniques that are often utilized in determining the value of these enterprises in the current healthcare delivery system. This second part will discuss the value drivers related to home healthcare and hospice enterprises. Introduction As discussed in Part I of this two-part series on the fair market value (FMV) considerations of home health and hospice enterprises, home healthcare enterprises are those enterprises that coordinate the delivery of healthcare services to patients in their…
-
April 2019 In the first quarter of 2019, there were no reported U.S. Tax Court cases involving either business, estate, or FLP valuation issues. Notwithstanding the above, there were several cases that valuation and litigation support professionals will want to consider. In this article, five recent cases are discussed. One of the leading cases circulating amongst the business valuation community is Kress v. U.S., Case No. 16-C-795 (U.S.D.C. Eastern District of Wisconsin), it has received considerable attention, especially by business valuation professionals. The Veriton Partners Master Fund Ltd. v. Aruba Networks, Inc. (April 16, 2019), a Delaware Supreme Court case…
-
Fair Market Value Considerations (Part I of II) The valuation of home healthcare and hospice enterprises and services are influenced by certain market forces related to the Four Pillars of Healthcare Valuation, i.e.,: (1) regulatory; (2) reimbursement; (3) competition; and, (4) technology—each of which relates to almost all aspects of the U.S. healthcare delivery system. This first of a two-part series on home health and hospice enterprises will review the unique value drivers that impact the typical valuation approaches, methods, and techniques that are often utilized in determining the value of these enterprises in the current healthcare delivery system. Introduction…
-
in Economic Damages Calculations (Part II of III) The purpose of this article—the second of three on this topic—is to provide the reader with an understanding of Chapter 2 (Costs) of the 2018 Practice Aid as well as certain other publications containing a body of knowledge on the best practices for developing “avoided or saved costs,” sometimes referred to by the courts as incremental costs. A prior article dealt with Chapter 1 (Revenue and Growth Rates) and part three will cover Chapter 3 (What Constitutes Best Evidence) of the 2018 Practice Aid and related topics. In 2015, the American Institute…
-
Considerations in Applying a Size Premium (Part III of III) In this third and final article, as displayed in Exhibits 1 through 4 in Part 1 of this three-part article, the size effect has been observed even when looking at recent periods starting in 1981 and 1990. If one holds that you should not apply the SP in the MCAPM and that beta should be the only measure of risk, one is supporting using the pure or textbook CAPM to estimate expected returns. But that cannot be correct as the literature clearly demonstrates. Though the pure CAPM is a good…