Breaking down invisible value Read Part 1 here. This overview is the second half of Robert Reilly’s series that examines the types of intellectual property analyses, different standards of value that may apply in valuation as well as the alternative types of intellectual property ownership interests and the alternative terms of intellectual property ownership interests. Finally, it offers a discussion regarding the factors that the business appraiser may consider in the specific identification of intellectual property.
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Intellectual Property Valuation Principles—Part 1 This article examines the types of intellectual property analyses, different standards of value that may apply in valuation as well as the alternative types of intellectual property ownership interests and the alternative terms of intellectual property ownership interests.
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More than a decade in the making, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have released a converged standard on revenue recognition. Titled, “Revenue from Contracts with Customers”, the standard is designed to enhance the process of revenue reporting and improve comparability in financial statements among corporations using IFRS and U.S. GAAP. The standard also impacts the sale of nonfinancial assets to noncustomers, such as real estate. In an in-depth interview with Accounting Today, FASB member, Marc Siegel expanded on this example, stating, “Even though you might not be a home builder and…
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Barely six months into 2014, General Motors (GM) has recalled more vehicles than it sold in the five years since it filed for bankruptcy. In February alone, 2.6 million vehicles were recalled for an ignition problem that’s been attributed to at least 13 deaths. Even so, the GM stock price has remained completely neutral since April. How is the stock valuation immune to such a corporate and public relations nightmare? Visit CNNMoney to find out. [button color=”blue” link=”http://money.cnn.com/2014/05/27/investing/general-motors-stock/index.html?iid=HP_Highlight” target=”_blank” font=”arial” align=”left”]Read Full Article[/button]
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The Expert’s Role The article offers the comments of one expert on how the courts (judges) could improve the end process.
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Since 2008, policymakers have kept interest rates at or near zero. All this cheap money was intended to heal the wounds of the financial crisis and encourage business owners to invest in and grow their businesses. Although this approach has helped a bit, business valuations tend to be running at higher than usual rates. AVC.com has reviewed recent data and determined whether this is a business valuation bubble forming and when it may burst. Of concern are non-linear asset value/earnings ratios that go against the norm. You can read the full article below. [button color=”blue” link=”http://avc.com/2014/03/the-bubble-question/” target=”_blank” font=”arial” align=”left”]Read Full…
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Understanding the nature and risk of expected cash flow This discussion summarizes the interrelatedness of the weighted average cost of capital and the weighted average return on assets within the context of a purchase price allocation for financial reporting purposes. Failure to understand this fundamental relationship can lead to inaccurate estimates of value for the acquired assets and, therefore, inaccurate reported asset values and amortization expense on the financial statements of the acquirer. The WACC can be viewed as a weighted average of the required rates of return for the individual assets of the acquired company. The selected intangible asset…
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The impact of hoarded cash in valuations The impact on business valuators in this economic and political climate is largely observational. Observational because any forecasted financial information installed in any formula must include the impact of managements’ sources and uses of “hoarded cash.”
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The Appraisal Standards Board (ASB) has released the Second Exposure Draft for proposed changes to the 2016-2017 Uniform Standards for Professional Appraisal Practice (USPAP). The scheduled revisions include: Defining the term “report” Edits to eliminate confusion regarding report drafts Revisions to Standard 3 to enhance consistency with other standards and clarify dates identified and reported Edits to eliminate confusion regarding confidentiality Other edits to improve clarity and enforceability of USPAP Comments are due by June 2, 2014. They can be submitted to ASBcomments@appraisalfoundation.org. You can read the full second exposure draft at the link below. [button color=”blue” link=”https://appraisalfoundation.sharefile.com/download.aspx?id=s1b2357c1dc74621a#” target=”_blank” font=”arial”…
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Use of photography in forensic and valuation engagements The purpose of this article is to provide the CPA/expert a brief introduction to the use of photography in a valuation or forensic engagement. It is not intended to be an all-inclusive training manual in forensic photography. Criminal forensic photographic procedures may, due to the differences between civil and criminal law, be materially different.
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After the media gaffe that disgraced LA Clippers owner, Donald Sterling, the mogul was fined $2.5 million by the NBA. There’s a misconception that he’s being required to sell the team as part of his lifetime ban from the sport, but that’s not actually true. NBA commissioner, Adam Silver, is asking the NBA Board of Governors to force Sterling to sell, which requires three quarters of the league’s owners to sign on. Common sense would ask that if Sterling has been banned from the league for life, how is it possible to own and operate a team within it? Wouldn’t…
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Professor, Aswath Damodaran, of the NYU Stern School of Business has released his 2014 Data Page online. Updated annually and exhaustively researched, the data page offers in-depth information on 41,000 companies in 131 worldwide markets, including measures of operation, leverage, pricing, equity risk premiums and country risk. One of the major changes to this year’s data page was the switch from Value Line to Morningstar, Bloomberg and Capital IQ for all U.S. firms. You can review the data page at the link below. [button color=”blue” link=”http://people.stern.nyu.edu/adamodar/New_Home_Page/data.html” target=”_blank” font=”arial” align=”left”]Read Full Article[/button]
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A two-way street In this article, Britt Madden and Britt Madden, Jr. respond to Jim Hitchner’s July 2013 QuickRead article on “Rigging the Cost of Equity”. The authors contend that the rigging is more likely the result of a lack of understanding the current status of small business in the present economy, which has left it forever changed.
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Suggestions for business valuation professionals thinking about retiring This article contains some tips from a long-time practitioner to business valuators who are reaching retirement age, but are not ready to retire and just play golf.
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With Colorado and Washington state legalizing casual use of marijuana, more states considering it and 20 allowing medicinal usage, at least 60 publicly traded entities have scrambled to cash in by offering pot penny stocks. Virtually none emerged through an IPO to avoid disclosure scrutiny. Real estate, marketing and even oil outfits have gotten into the game, either through reverse mergers or declaring a new line of business. Forbes magazine interviews Michael Mona, Jr., CEO of CannaVest, one of the biggest winners at the top of the pot stock bubble. The company surged 1,260 percent in 2013, the year it…
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The average major league baseball (MLB) team today is worth $811 million, up 9 percent from last year. That’s not too bad for being in the middle of the pack. To make it to the top, however, a lucrative deal and strong regional network are essential. For the first time, five teams combine the right ingredients to make it over the $1 billion mark. The increase in value for the teams was more than double the 4.4 percent gain in revenue. To see how the valuations break down for your favorite teams, click the link below. [button color=”blue” link=”http://www.forbes.com/sites/mikeozanian/2014/03/26/baseball-team-values-2014-led-by-new-york-yankees-at-2-5-billion/” target=”_blank”…
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Undervaluation can be costly The recent U.S. Supreme Court case, U.S. v. Woods, overturned legal precedent and signaled that accuracy-related penalties can be imposed in more instances. This broad interpretation exposes clients and practitioners to substantial penalties. In this article, three recent cases are summarized on how, when, and why accuracy-related penalties are applied.
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Fifteen U.S. Representatives have sent a letter to the U.S. Small Business Administration (SBA) seeking clarification as to why the agency changed its requirements regarding real estate appraisers handling going concern appraisals for special use properties. In 2011, the SBA allowed appraisers to take on such projects after completing an eligibility course. As of January 2014, the agency changed its valuation requirements involving business and intangible assets in situations where there is a change in ownership, a special use property and a residual business value of more than $250,000 to the loan amount. In these situations, the SBA now requires…
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While most don’t see a benefit to speaking a second language in their personal or professional life, the increasing diversity of large cities and unexpected international elements in business deals is stressing its importance. Even though you may not remember any of your high school Spanish or German, it’s never too late start again, if for no other reason than the financial incentive involved. The Economist joined forces with scholars at the Massachusetts Institute of Technology (MIT) to determine the value of languages; which pay the biggest dividends with regard to education, GDP and compounding salary interest. You’ll be surprised…
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Understanding the different aspects of an industry is key to evaluating a company’s future performance Understanding a subject entity’s industry is a hallmark of any good valuation report. Conducting a very detailed and intense industry analysis can provide valuation analysts with specific knowledge needed to determine an appropriate conclusion of value. As a general rule, a company’s performance is commensurate with the industry to which it belongs. Understanding the different aspects of an industry is a key component to evaluating future performance and the overall value of a company. This is an aspect of business valuation that warrants greater attention…