Perils of Selling to Family Members and Delaying a Sale Now to Third Parties Are the increases in market multiples and the access to capital a sign of the impending surge of business exits? In this article, the author shares his views on selling to family members vis-à-vis to a non-heir third party, the perils of waiting to sell a business, discussing the valuation gap and seller’s expectations, and delayin ...

NACVA Member Survey Findings on Employee Recruitment and Retention Hinge Marketing recently completed a NACVA member survey. In this survey, Dr. Frederiksen learned that NACVA members sought to improve recruiting and retention in their firms. These were the two highest. In addition, gathering insights about how firms approach these challenges, we also asked employee-candidates how they search for and evalua ...

The Value of a Business is Not Always What it Seems (Part I of II) Personal goodwill is taxed at the individual capital gains tax rate, not the higher corporate income tax rate. Therefore, a credible personal goodwill calculation can amount to significant tax savings. One that is not adequately defensible invites risk of an audit. Every personal goodwill calculation is unique to each business, and the manag ...

Given a Fixed Amount of EBITDA After reading Steve Egna’s article in the April 12, 2017 issue of QuickRead Buzz, in which he suggests that a larger multiple of EBITDA is realized as the number of employees of the selling business increases, the author considered testing whether that same approach could help explain why a certain amount of EBITDA would generate multiple amounts of MVIC. In this article, the ...

Why Attorneys Tend to Overvalue Their Cases and What to Do! Research indicates that most lawyers over value their cases, and what is even more fascinating, it does not matter how long the attorney has been in practice! There are a number of reasons over valuation occurs; sometimes the answer is just that the attorney did not spend enough time reviewing the case, or failed to consider getting a second opinio ...

Authored by: James R. Hitchner; R. James Alerding; Joshua B. Angell; and Katherine E. Morris The author provides a review of Discount for Lack of Marketability Guide and Toolkit, authored by James Hitchner; R. James Alerding; Joshua B. Angell; and Katherine E. Morris. ...

Creating Visibility and Personal Brand Recognition In this article, Dr. Frederiksen provides seven branding tips for aspiring experts. ...

Greater Disruption and Change Awaits the Financial Services Industry FinTech, or financial technology, has disrupted the financing industry. The FinTech revolution has not only changed the financial services industry, but it has also changed specific sectors, including: retail banking, lending and financing, payments and transfers, wealth and asset management, markets and exchanges, insurance, and blockchai ...

Part I of II This is a two-part article. A variety of methods may be appropriate, depending on the context, to value contingent or disputed assets or claims in solvency opinions. These include probability discount, hindsight, and traditional valuation of future earnings. Other possibilities are the cost of insurance or Monte Carlo simulation. The authors discuss the cases and the uses and limitations of the ...

Focus on Value Management In this article, the author discusses the importance of using business value as the baseline driver of business performance and how we use it as a measurement of success. ...

Defining Rights and Establishing Control to Protect Your Firm and Clients In this article, the authors propose best practices used to establish acceptable use policies (AUP). These AUPs define rights and establish controls that protect the firm and client information. ...

How to Tell the Whole Truth and Nothing but the Truth The often-unspoken truth is that many deposition or cross-examination questions that expert witnesses in the field of forensic accounting, business valuation, or matrimonial litigation will be asked are written to make the truth sound like a lie and a lie sound like the gospel. This second article of the Unimpeachable Neutrality series offers proactive t ...

What Your Expertise is Worth When pursuing new engagements, financial consultants often face competition from others who are willing to accept below-market rates. This fee-based competition can be demoralizing and frustrating, but the tips shared in this article may help. ...

Funeral Service Retirement Challenges The funeral industry is dynamic and one where often the directors “build to serve” and overlook the importance of “build to sell”. The authors here provide an overview of the valuation and consulting opportunities. ...

What Physicians Don’t Know About Their Agreements Could Hurt Them Nearly 45 years after the enactment of the federal Anti-Kickback Statute, it is still not uncommon to hear of physicians facing bribery allegations, large settlement amounts, and even jail time for breaking the statute’s anti-fraud measures. While evolving case law has certainly added to the complexities and prevalence of the statute’s enforc ...

The Case for Use of a Risk-Adjusted Rate in Damages Cases Robert Dunn and Everett Harry laid out a process for modeling and discounting future lost profits to present value in their article, Modeling and Discounting Future Damages. Not all experts agreed with the position presented by Dunn and Harry. In March, we revisited modeling and its level of acceptance. This article revisits the more controversial po ...

Context Matters This is the second of a two-part article. The first part, which addresses the efficient market hypothesis, is titled Proponents of the Efficient Market Hypothesis Always Want More Cowbell. Although many valuation practitioners are generally indifferent to context when valuing a business or asset, in litigation, as well as other areas that require valuation services, context matters. In this ...

Ascertaining the Financial Status of a Business in a Few Quick Glances The 60-Second Method is a system of ascertaining the financial status of a business or other entity in a few quick glances. It is a training tool that can be used to demonstrate how financial analysis works, or instruct decision-makers beginning to read and understand financial statement content. ...

The Objective and Subjective Tests Used to Determine Foreseeability To recover lost profits in a commercial damages case, three standards must be met. They are proximate cause, foreseeability, and reasonable certainty. Of these three, foreseeability is the lost profits standard in which a financial expert will have the least involvement. But this does not mean the expert’s work would not benefit the trier-o ...

Always Want More Cowbell The More Cowbell skit can be repurposed to explain debates over the efficient market hypothesis. Many proponents of the efficient market hypothesis may initially find it annoying that nonbelievers do not share their view. However, believers’ faith in the efficient market hypothesis is dependent on nonbelievers continuing to try, but inevitably failing, to ‘beat the market.’ The effi ...