NACVA’s Silver Anniversary Conference NACVA and the CTI’s 2016 Annual Consultants’ Conference held this past June in San Diego, CA was a spectacular assembly of presenters, attendees, exhibitors, candidates, and staff. This one pulled out all the stops, featuring prestigious keynote speakers, engaging training sessions, an assortment of networking opportunities, and many more events to enjoy. It proved to b ...

Consideration for Closely Held Securities—DLOM Theoretical Models (Part II of II) This article summarizes the factors (and the empirical evidence) that the analyst may consider in the measurement of a discount for lack of marketability (DLOM) valuation adjustment associated with non-controlling securities of a closely held company. This security-level DLOM is different from the entity-level DLOM that is app ...

Consideration for Closely Held Securities, Part I of II Valuation analysts may be asked to value closely held company securities for various reasons. These reasons include transaction pricing, financial accounting, taxation planning and compliance, and litigation (related to both breach of contract and tort claims). Depending on: 1) the business valuation approaches and methods applied; and 2) the benchmark ...

Studies in the Closely Held Company Valuation (Part II of II) In the first part of this two-part discussion, the author identified six transaction risk factors attempting to sell a controlling (including 100 percent) interest in a closely held company. Those included: 1) an uncertain time horizon to complete the offering or sale; 2) “Make ready” accounting, legal, and other costs to prepare for and execute ...

Six Transaction Risks Owners Face Selling a Company that May Explain DLOM (Part I of II) In this first of a two-part article, Robert Reilly reviews the various models analysts use to estimate the DLOM and factors analysts consider in the DLOM selection. Valuation analysts often value closely held companies for transaction, taxation, financing, accounting, litigation, and other purposes. Depending on: 1) the ...

What About Subsequent Events—Lessons from the Valuation of Artwork? In the December 2015 Tax Court Memo Estate of Newberger v. Commissioner, the Tax Court considered post-date-of-death sales prices in the valuation of three separate pieces of artwork owned by the decedent. Considered in one instance was the sale of the actual piece of art itself, and in two other instances, the sale of other pieces of art c ...

The Case of Trademarks and Brands Since the adoption of fair value accounting governed by SFAS 141 (in 2001) and IFRS 3 (in 2004), hundreds of thousands of different intangible assets have been valued, audited, and reported in financial statements of public companies all over the world. After fifteen years of fair value accounting, the debate about the accuracy of such values and their relevance for readers ...

Nuances Valuing and Normalizing an Auto Dealership There are many reasons an auto dealership may require a business valuation; buy-sell agreements, shareholder disputes, employee stock ownership plans (ESOPs), and estate planning and gifting strategies. In many instances, there will be an opposing party that questions the validity of the final value, whether it be a dissenting stockholder or the Internal Re ...

About Valuing Pass-Through Entities ...

Hitchner, Pratt, and Fishman Answer the Call In the past month, business valuation professionals have read reviews from a number of practitioners serving as reviewers for the Q&A Guide. All of them are positive. In this book review, we go into a little more detail and discuss what these established and accomplished business valuation professionals and leaders answer in the Q&A Guide. So, what does t ...

Businesses Where Real Estate is Integral to Operations What is the best approach to use to value a business where real estate is indispensable to operations? In this article, Dr. Brous discusses the use of the option to abandon. ...

Q&A Guide for Valuation Practitioners James Hitchner, Dr. Shannon Pratt, and Jay Fishman are co-authors of a publication that uses a Q&A approach to address important questions. The article includes excerpts from this book. ...

Benchmarking Your Reports and Examining What Hypothetical Conditions and/or Extraordinary Assumptions You Have Made! However, thanks to WikiLeaks, “The Interview”, and Sony Pictures, a rather sizeable repository of sample reports exist free of charge. These reports, as you might expect, are from the transaction arms of Big Four firms as well as leading national shops. Anyone who has been doing this for a wh ...

IP Valuation—Beyond the Income and Cost Approach Valuation analysts (“analysts”) are often asked to value debtor company intellectual property (IP) within a business bankruptcy context. Some of the bankruptcy reasons to value IP include the assessment of the following: the debtor’s solvency, a secured creditor’s collateral and protection, the fairness of a Section 363 IP asset sale or license, the debtor’s ...

Disclose Now or Later? There is no requirement to attach an appraisal for an estate of gift tax return, but having been involved with the classification of returns at the Cincinnati Service Center located across the river in Covington, Kentucky, I want to share my thoughts on when it is appropriate to attach an appraisal done for gift and estate tax purposes. ...

With the New Year just around the corner, Mercer Capital is beginning their countdown a little early.  Here are this year’s 10 most popular posts from The Financial Reporting Blog.  Happy New Year 2016! To read the full article in Mercer Capital's Financial Reporting Blog, click: Financial Reporting Blog: Best of 2015. This article is republished from Mercer Capital's Financial Reporting Blog.  It is reprin ...

The IRS is Challenging the Appropriateness of Discounts when Preparing a Valuation The current regulations, Revenue-Ruling 93-12, allow for discounts when valuing a Family Limited Partnership (FLP). The proposal is expected to potentially limit the allowed discount and consequently raise the taxable portion of the trust or estate structures. This article reviews the current requirements for FLPs, their hist ...

Duff & Phelps has released its 2015 U.S. Goodwill Impairment Study.  This is prepared in partnership with the Financial Executives Research Foundation, analyzing the general and industry trends of goodwill impairment of over 8,700 U.S. publicly-traded companies. To download your complimentary copy, click: Goodwill Impairment Study 2015. ...

Buyers do not offer premiums simply for the sake of gaining control, but rather, through exercising the prerogatives of control, those buyers expect to generate economic benefits.  Travis W. Hams, leads Mercer Capital’s Financial Reporting Valuation Group, looks at the Appraisal Foundation’s white paper on the subject of JAB Holdings’ acquisition of Keurig Green Mountain. To read more about the results of t ...

How to Account for Current or Proposed Legislation in the Business Valuation Engagement Oftentimes a valuation engagement presents a unique set of challenges for the appraiser. For instance, a particular engagement may be the first look at how companies in a particular industry operate. Other times, it may be a look at a company experiencing a downturn, and the appraiser must determine how to properly deter ...