Valuing Nokia Siemens Networks Nokia Corporation is bound to look very different after Microsoft buys its devices division. When the initial purchase was announced, most in the industry were shocked. The bigger question is: How much will the remaining parts of the company be worth once the deal is done, and how should they be valued? Analysts from JP Morgan Cazenove provide a very interesting breakdown in a ...

Working within the DLOM ambiguity This review examines the impact of volatility as a risk factor in the discount for lack of marketability (DLOM) and answers questions regarding the flexibility of adjustment periods. ...

The IRS recently issued regulations (T.D. 9630) affecting how the differential income stream approach applies to cost-sharing agreements.  Nearly two years ago, “final” cost-sharing rules were published under Sec. 482.  This newer round of regulations is intended to ensure that cost-sharing agreements are in line with Sec. 482’s commensurate-with-income principle.  In its earlier attempt to guarantee pricin ...

So why do we, as appraisers, differ from judges when it comes to subsequent events? Traditionally, valuation and litigation support professionals only consider facts known or knowable as of the valuation date, yet courts will look at subsequent events. This article examines how a valuation and litigation support professional may address subsequent events. ...

Equity funds now able to engage in mass advertising In just a few days, the ban that prevents private equity funds from marketing directly to the public will be lifted. A recent review by Michelle Park of Crain’s Cleveland Business examines what this might mean for various private equity and venture capital funds and their future customers. ...

In a recent presentation to donors and alumni, University of Louisville president and economist, Dr. James Ramsey gave what most thought would be a gloom and doom “state of the university” address.  While government funding and support from the State of Kentucky are certainly in decline, Ramsey’s presentation was surprisingly upbeat.  Freshmen test scores were up dramatically.  The graduation rate was stron ...

With the kickoff of the new football season, Forbes has once again, released its much anticipated valuation list of Most Valuable NFL Teams.   How the numbers stack up gives a very interesting view inside the most valuable professional sports league on earth.  According to the Forbes data as reported by Pressboxonline.com, the average NFL team increased in value by 5 percent.  Interestingly, winning the Sup ...

Giving holders of concentrated risk in public company stock a tax break This article establishes there is recognition by the IRS and the courts that a well-supported proof of impairment based on the sale of a large number of shares necessitates an investor concession. It provides the rationale and methodology to capture the existence and the level of impairment. ...

Do the missing months mask the true financial performance? In a recent study entitled, “Orphans Deserve Attention:  Financial Reporting in the Missing Month When Corporations Change Fiscal Year,” the authors of the study found that out of the 1,786 public firms reviewed from 1993 to 2008, 45.4 percent shifted their fiscal year-end by intervals of up to two months and opined that these changes could “fly und ...

I built an Excel file with a valuation model using Warren Buffett's measure of "owner's earnings."  In an interesting spin on valuation, analysts at AquaResearch applied what they call “Buffett-style, owner’s earnings” valuation calculations to the US Bancorp (USB) company stock in a DCF style approach.  The author supports his review with a link to an excel file which completely lays out Warren Buffett’s v ...

Depreciation is not a “paper” expense. It is very real. Fully depreciating capital assets distorts the income statement and balance sheet. The depreciation recorded for tax and financial reporting purposes also tends to distort the net asset value of the asset. Depreciation is not a “paper” expense. It is very real. ...

Appraising marina properties is a challenging niche with as many variables as there are bodies of water Just like appraisals on dry land, location plays a major role in developing an opinion of value for a marina property, but the criteria for an appraisal can be a little different from those of landlocked commercial enterprises. Here are a few of the questions that must be considered when valuing marina pr ...

The value of California-based electric automaker, Tesla Motors’ earning potential and share price are analyzed after a triple-fold increase from earlier this year.  Roben Farzad of Bloomberg Businessweek takes a closer look at attempts by Goldman Sachs to dampen optimism surrounding Tesla’s increasing profit margins.  Do the numbers really show Tesla has power to remain consistent with this kind of growth? ...

In a fast and concise analysis, Bill Conerly of Forbes.com examines whether the rise in interest rates, particularly with commercial mortgages, automatically translates into a drop in commercial property value.  Conerly explains that your decision-making all depends on whether you take an internal or external view of the process.   How can this logic be wrong? Why doesn’t the table show clear real esta ...

A frequently missed opportunity for appraisers This article provides an overview of some of the complex rules relating to the built-in gains tax. It is intended only to acquaint business valuators with the structure of the tax and some of the key considerations which the business valuator must address. ...

Will the valuation report prepared by the non-accredited CPA be admitted? The author was recently involved in an Oklahoma domestic relations case where the opposing expert contended he did not have to abide by AICPA valuation standards, reporting or otherwise, since he was not a member of the organization. This article summarizes how this issue was handled by the Oklahoma judge. ...

Senators, Bob Corker (R-TN) and Mark Warner (D-VA) introduced a bill on June 25th that would eliminate government-sponsored Freddie Mac and Fannie Mae.  Over a five-year phase out, the institutions would be replaced by a new government reinsurer, a Federal Mortgage Insurance Corp (FMIC). Originally reported by National Mortgage News, the structure of the FMIC would be similar to the Federal Deposit Insuranc ...

REIT stocks fell sharply in the second quarter, ranging between 11 and 15 percent.  Originally reported by the Wall Street Journal, the Dow Jones Equity All REIT index posted a 2 percent negative return in the second quarter.  The index hasn’t reported a performance that weak since the third quarter of 2011.  Analysts are saying REITs took a dive because investors are nervous about rising interest rates sta ...

Suggested benchmark analysis to assess the reasonableness of the cost of equity In the February/March 2013 issue of the Financial Valuation & Litigation Expert (FVLE), Issue 41, Jim Hitchner authored “How to ‘Rig’ a Valuation: The Discount Rate.” This is the first of a two-part FVLE series. The article provides suggested guidance to unmask the intentional “rig.” ...

“Bank of America spokesman Terry Francisco told Bloomberg that the lender’s program prevents paperwork errors from delaying loan applications and that the overseas completeness checks don’t replace in-depth reviews done by licensed U.S. staff.” According to the Appraisal Institute and Bloomberg, Bank of America (BofA) has opened an office in Bangalore, India to deal specifically with reviewing valuation rep ...