Practice techniques used to serve as an effective expert witness In this final part of Mark Shirley’s litigation services series, the focus turns to practical tips for new and experienced expert witnesses. These include what to consider before engaging, how to organize the file, the need to understand the vernacular and preparation, as well as the need to understand the discovery process. Impressions are al ...

An overview of the Federal Rules of Evidence, Federal Rules of Civil Procedure and leading pre- and post-Daubert cases In this third part of a four-part series, the focus turns to the rules of evidence and standards used to admit the testimony of expert witnesses. While a minority of jurisdictions follows the Frye standard, the majority has adopted the Daubert standard. Objective testimony is critical, whic ...

Professional accounting valuation accrediting standards for effective litigation In this second part of his four-part series, Mark Shirley, CPA/ABV, CVA, MAFF, CFE, focuses on complicated professional standards. Here, the article examines AICPA’s Code of Professional Conduct and Statement on Standards for Consulting Services (SSCS), which sets forth the scope and limitations of  practice. While the AICPA ha ...

Procedural phases in litigation: the role of the expert from drafting of the complaint through trial In this first part of a four-part series titled “Providing Effective Litigation Services” Mark Shirley, CPA/ABV, CVA, MAFF, CFE presents an overview of the phases in a civil case, from filing of the complaint through trial.  An effective expert is a professional that understands the procedure, rules, his or ...

Five key questions to determine whether it’s time to switch to a digital system At many firms, practice management software is often referred to as the “last frontier”, according to Matt Jagst, Director of Enterprise Product Management in the tax & accounting business of Thomson Reuters. Most firms manage to get by with outdated systems and processes. Switching to digital software that integrates time, ...

Important factors to consider in making tax adjustments to pass-through income Damodaran recently wrote about the potential devaluation of dividend-paying stocks if the preferred dividend tax rate were to climb back up to the ordinary rate.  This could inspire valuation experts to make a tax adjustment reducing untaxed Pass-Through Entity (PTE) income to equate it with corporately taxed income that qualifie ...

Changes in the capital markets utilized in financing healthcare transactions have transformed the way that the healthcare providers and enterprises operate within the current transactional marketplace, explains Robert James Cimasi.  These changes, particularly in recent years following the “Great Recession,”  relate to both the availability of capital sources and the types of financial instruments used.  As ...

A Majority ≠ Control or Liquidity Examining actual transactions in the private capital markets and court outcomes figure into whether holding a large block of stock equates with it control or even a premium.  The internal and external factors, legal provisions, and property performance drive this result.  ...

Careful Estate Planning Overcomes IRS Objections Even After Sudden Death Keller v. United States resulted in a huge family limited partnership (FLP) win—$125 million—in Fifth Circuit Court.  In this article, learn what the lead attorneys at the Dallas-based law firm of Meadows, Collier, Reed, Cousins, Crouch, and Ungerman have to say about FLP planning and their victory as well as what every financial advis ...

Forensic Accounting Requires Nuance Performing forensic accounting in front of the Justice Department is like a wild rollercoaster ride, explains John DeLuca. Here’s why.  ...

Plus: Bishop v. Commissioner Rules on When and Whether a Bad Debt Loss Can Be a Claimed Deduction In Schwab v. Commissioner, a case turns on when a variable universal life insurance policy is a taxable event.  In Boone Operations Co., LLC v. Commissioner, find out when contributing fill dirt to the city of Tucson is or isn’t a charitable or taxable event. ...

Why VCs and Private Equity Pros are Sensitive to IRC 409A Valuations Rand Curtiss weighs in on why IRC 409A option-related valuations for small businesses do not solve real business problems for them. They set minimum exercise prices, asserts Curtiss—but that’s all they do. ...

What is Considered Good Business Sense Today May Be Considered a Breach of Fiduciary Duty Tomorrow. Pay Special Attention to Fairness Opinions. Are your clients risking liability as they complete their daily tasks? What is considered good business sense today may be considered a breach of fiduciary duty tomorrow. That possibility is increasing. Business appraisers should pay special attention to fairness op ...

Earnout Variables Often Account for 15 to 25 percent of Purchase Price in many Middle Market Acquisitions. Here are Tips for Structuring Them Carefully Earnouts typically appear in a large number of middle-market deals, usually accounting for 15 to 25 percent of the total purchase price.  While an earnout can to be an elegant solution to “close the gap” between seller and buyer, the fact is earnouts are com ...

Buyers and Sellers Have Different Relative Negotiation Advantages, and the Letter of Intent in an Engagement Helps Define Terms. Here’s How. While perhaps not the longest or most expensive document among those found in the in the M&A process, the letter of intent (LOI) may well be the most important, particularly to the seller. The LOI sets the tone for the transaction and serves as the road map for the ...

Choosing an Appropriate Weighted Average Cost of Capital Definition Sometimes Depends On Context Valuation principles generally hold that the value of a business is largely a function of return on invested capital and growth, writes J. Richard Claywell, since these are the primary drivers of free cash flow. But how does this cash flow relate to the asset and liability values on the balance sheet? ...

Unreported Income Can Be Detected By Direct and Indirect Methods; Indirect Methods Examine Cash Inflows and Outflows. Here’s How. Joe Epps, CPA/CFF/ABV, CFE, CVA, explains how a forensic accountant goes about searching for unreported income—a commonly required practice in divorce and bankruptcy cases, contract disputes, and fraud investigations.  The direct method is simply reviewing financial statements fo ...

Difficulties Sometimes Complicate a Valuation Engagement. Here’s How to Anticipate and Derail Potential Disasters With Solid Upfront Client Conversations Conversations with clients are critical to ensure both owner and appraiser are in agreement about standards in a final report, the length of time the process will take, what the final report will look like, and how much it costs. In this second installment ...

Buyers and Sellers Need to Negotiate Delivery Targets for Working Capital and Agree on a Fair Market Value for Fixed Assets. Valuation principles generally hold that the value of a business is largely a function of return on invested capital and growth, writes Ron Stacey, since these are the primary drivers of free cash flow. But how does this cash flow relate to the asset and liability values on the balanc ...

Arbitration Panels Don’t Know Everything a Financial Expert Does. But That Doesn’t Mean You Should Even Consider Talking Down to Them. Arbitration is somewhat similar to a bench trial, but experts need to present opinions somewhat differently than if they were testifying in a jury trial—and this is particularly true with experts testifying on financial issues such as economic damages.  Joe Epps explains why ...