“Rome was not built in a day,” but efforts are underway to do it faster for international valuation standards. At the recent World Congress of Accountants, Sir David Tweedie, chair, International Valuation Standards Council, outlined the challenges facing the valuation profession when he stated and questioned the following: “The profession developed as secondary specialization by experts working in differen ...

Fifth Circuit Affirms District Court and $83 Million in Unpaid Taxes and Interest Owed by Donees The Fifth Circuit recently affirmed the district court’s decision and the imposition of unpaid taxes and interest on donees of shares sold at less than fair market value to the company owed by relatives of the donor. As Joe Brophy explains, this case illustrates the pitfalls of deathbed planning involving asset ...

  In a recent valuation, Apple has been crowned the most valuable company on the planet, and second place wasn’t even close. After its stock hit a record high recently, Apple was valued at $700 billion. That’s $300 billion more than the runner-up, Exxon Mobile. It’s hard to wrap your head around these kinds of numbers, but imagine the enormity that is Google. Even with that kind of influence, Google is ...

At some point in a business valuation analyst’s career, an attorney or pro se party will call asking for a business valuation and perhaps even to retain your services. A good starting point is Business Valuation in Divorce: Case Law Compendium, 2nd ed. This edition is 584 pages long and provides a comprehensive court case digest that emphasizes similarities and differences in the treatment of goodwill (prof ...

Lessons to be learned by Valuators from Cavallaro v. Commissioner Cavallaro v. Commissioner holds some valuable lessons for valuation experts. Following a tax-free merger of two companies owned between different family members, the children of the petitioners (and owners of one of the companies, pre-merger) received 81 percent of the stock in the merged entity. Differences arose between one set of accountan ...

Five years ago, no one really knew what big data was and now, it seems it’s all anyone can talk about. Big data is the term used for information retailers, government agencies, and other organizations collect from the public that other entities might have a vested interest in purchasing because they produce ancillary products or services that could be marketed to the same individuals. While there has been m ...

Issues in Hedge Fund Valuations The proliferation of hedge funds presents an opportunity for valuation analysts. In this article, the author provides an overview of the hedge fund industry, compares the manner in which hedge funds operate vis-à-vis private equity and venture capital, and outlines the opportunities and challenges for valuation analysts interested in serving this market sector. ...

Recognizing Hindsight and Projection Bias How can one expert opine that the company is insolvent and another expert—viewing the same financial statement—opine that the company is solvent? In this article, Michael Vitti answers this question and provides an overview of what is considered a preference and a fraudulent transfer. ...

So, You Want to Become a Venture Capitalist? In this article, Edward Mofrad shares his views on what it takes to become a successful venture capitalist. ...

In Chapter 11 Bankruptcies, Part 2 Financial experts may be called on to provide a number of services in Chapter 11 bankruptcy cases. Common among these services is the analysis of the interest rate to be paid on secured claims, the valuing of the bankrupt business or a portion of the bankrupt estate, and the creation or analysis of cash flow projections to assist in determining the feasibility of the reorg ...

Insights from the Analysis of Mega Transactions By scrutinizing data from large transactions, valuation experts can glean important information and insights into current healthcare valuations. In this article, Collin McDermott and Bridget Triepke summarize SEC filings, review the implied valuation of large healthcare mergers—based on the purchase price—and provide a detailed review of the fairness opinions ...

In Chapter 11 Bankruptcies, Part 1 of 2 Financial experts may be called on to provide a number of services in Chapter 11 bankruptcy cases. Common among these services is the analysis of the interest rate to be paid on secured claims, the valuing of the bankrupt business or a portion of the bankrupt estate, and the creation or analysis of cash flow projections to assist in determining the feasibility of the ...

Never Mutually Exclusive Strategy has many meanings. Implementing a strategy that adds shareholder value and factors in changing market dynamics is the best strategy. In this article, Carl Sheeler shares his views on “trusted advisors” and how these trusted advisors often do not have the depth or experience to assist clients in devising a strategy that will increase shareholder value. The article suggests t ...

Best Practices for Estimating DLOMs In this article, Shannon Pratt suggests that practitioners are not using effectively the DLOM databases and defending the DLOM. Dr. Pratt presents a methodology that he argues is more defensible and comprehensive. ...

Private companies are subject to several frameworks for financial reporting purposes. In this article, Mark Zyla explains the role of the Private Company Council (PCC) and provides a summary of several recommendations the PCC has made to the FASB regarding accounting for goodwill and business combinations. ...

According to Accounting Today, performance for private companies increased for the third straight quarter. Based on a report by Sageworks, sales for private companies grew an average of 8.6 percent in the past year, yielding an increase in net profit margins of nearly 7 percent. Among the industries seeing the highest increases were law firms and medical practices. The report also identified the 10 industri ...

Fifth Circuit Reverses the U.S. Tax Court and Upholds the Fractional-Ownership Discount The Fifth Circuit reversed the U.S. Tax Court recognizing the fractional-ownership discount advanced by the Estate of Elkins and awarding the Elkins family a $14.4 million estate tax refund. Joseph Brophy explores the recent ruling. ...

A Principle-Based Model Revenue Recognition Wiley author Joanne Flood looks at how the converged revenue standard affects companies reporting under U.S. GAAP. ...

Key Issues For all of Mr. Koons’ careful estate planning, involving a significant sale and redemption transaction of business operations to provide liquidity and flexibility in his later years, the planning was disrupted by an untimely death—Mr. Koons’. The disruption here highlights the importance of starting early with business valuation input to help avoid a complex confluence of strategic transactions w ...

Issues and Opportunities This article discusses some of the issues in using the Pratt’s Stats transaction data, which can be used to develop multiples in a Market Approach or to develop a private market discount rate used in an Income Approach. The information presented is relevant to both business brokers/intermediaries and business appraisers. ...