Exits of private equity firms from investments fell 67 percent by volume and 81 percent by dollar value.
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Valuation professionals must continually keep abreast of the latest news and developments. Whether it’s the latest Internal Revenue Service (IRS) ruling, a new, wide-ranging court decision, or newly issued standard, trying to stay on top of it all—while managing a practice—can pose a significant challenge. But as Nancy Gault recently learned at NACVA’s Annual Consultants’ Conference, Around the Valuation World in 90 Minutes, offers time-strapped practitioners an ideal solution: a monthly webzine-style summary of the latest news, trends, and issues in the BV and financial forensics profession delivered in 90 minutes. Learn more.
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Owners Looking to Protect Home Views Buy “Air Rights” to Stop Further Development. See the Video to Find What One Homeowner Paid $600,000 to Preserve. The latest trend in Seattle’s real estate market has homeowners looking up for some quick cash, reports Heather Graf at King 5 News (KVUE, an ABC affiliate) in Seattle. Depending on where you live, the air above your roof could be worth a lot of money. Here’s more:
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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.
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One Medical Practice Could—Depending on How Rules of Thumb are Applied—be Valued at Several Radically Different Prices. Find Out Why! Paul Hyde, in a recent Around the Valuation World™ in 90 Minutes webinar, explained why rules of thumb are dangerous to rely on for valuation. The focus of his argument relied on six simple graphics that illustrated how the value of one hypothetical medical practice could—depending on how a rule of thumb is applied—be assessed at either $800,000 or $200,000 . . . or any number of different variations in between!
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More Detail on Obligations Included in Minimum Lease Payments Required Under ASC 840 Grant Thornton’s On the Horizon web publication explains that leasing agreements vary in their specific accounting requirements when it comes to assessing — and retiring the value of — leases. Here’s more:
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Requiring Valuation Analysts to Have Specialized Trainingk Credentials, and to Adhere to Professional Standards Will Protect ESOP Participants and Beneficiaries CPA Practice Advisor reports that the President and CEO of the American Institute of CPAs (AICPA), Barry C. Melancon, CPA, CGMA, has publicly announced his organization’s support for a new bill in the House of Representatives. H.R. 2041 would modify the definition of fiduciary under the Employee Retirement Income Security Act of 1974 to exclude appraisers of employee stock ownership plans. Here’s more:
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A Disparity in Valuation Prices Between Companies Large and Small in Similar Industries Adds to Investment Challenges Jwalit Vyas at The Economic Times (India) illustrates how a wide disparity in valuation between companies large and small offers an additional challenge for business owners, investors, and financial consultants. Here’s more:
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An Overly High Valuation Can Scare Away Investors or Spark a Down Round that Dilutes an Earlier Angel Investment Mark Boslet at PE Hub explains that with IPOs on track to have their biggest year since 2010 and some major technology disruptions sparking infectious excitement, it’s important to keep in mind key fundamentals including not accepting too high a valuation for your business or investment properties. Here’s why:
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Industry Moves to Enhance Transparency of Investments Holding More Than $93 Billion in Assets The Investment Program Association (IPA), a trade association for non-listed, direct-investment vehicles, announced recently the adoption of the IPA Practice Guideline for the valuation of publicly registered, non-listed real estate investment trusts, The Wall Street Journal reported. Here’s more from a Globe Newswire report the article cites:
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On the Horizon Offers Two Examples of Appropriate Ways to Apply FASB Guidance. Plus: New Guidance on Reporting Discontinued Operations and Not-for-Profit Entities Grant Thornton recently published a useful article on applying the equity method in its On the Horizon web-based publication, which also notes that the Fair Accounting Standards Board (FASB) has suggested new guidelines for reporting discontinued operations and that the American Institute of CPAs (AICPA) has released its guide on not-for-profit entities.
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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.
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Understanding Both Sorts of Appraisal is Critical to Valuing Minority, Partial Interests in Holding Entities that Own Real Estate and Other Assets that are Gifted, Sold, or Otherwise Transferred Randolph Glennon, MAI, CRE, MBA, and president of Eastern Appraisal & Consulting in Portland, Maine, explains in the New England Real Estate Journal why there’s growing need for appraisers who understand both real estate appraisal and business appraisal. An excerpt:
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Congress Needs to Reduce, if Not Eliminate, Support of the Mortgage Market in Order to Encourage Private Capital to Enter the Market, Says Agency Head Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco said that Congress needs to take action to significantly reduce, if not eliminate, the government’s continued support of the mortgage market and make it more palatable for private capital to enter the market, Reuters reported March 19, and Appraiser News Online highlighted this week. DeMarco made his comments March 19 before the House Financial Services Committee. The Appraisers News Online explains:
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Past Performance is No Longer a Viable Valuation Tactic: Learn to Anticipate Future Prospects with Data Mining, Proprietary Benchmark Techniques, and a Close Look at Both Cash Flow and Capital Expenditures. Caleb Slabbert, writing at VentureCapital.org, which bills itself as a non-profit organization that has been “a premier resource for both entrepreneurs seeking funding and for investors who want to help promising young companies achieve their potential,” asserted this week (3/26/13) that past performance of a company is no longer a viable valuation tactic. What matters? Newer techniques that many firms aren’t taking advantage of:
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Based in Florida and Employing 600 Personnel in 59 Offices, New Company Is Third Largest Firm Providing Commercial Real Estate Valuation Advisory Services Forty-two independent CRE appraisal companies, with a total of 59 offices and 145 MAIs, have merged to form Valbridge Property Advisors (www.valbridge.com), Commercial Property Executive reports. The new company, headquartered in Naples, Fla., will rank in terms of size behind only Integra Realty Resources and CBRE among companies providing CRE valuation and advisory services. Here’s more:
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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?
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Judge Cuts Apple Award Versus Samsung, Sets New Damages Trial Poornima Gupta and Erin Smith report at Reuters report that Apple Inc had a major setback in its mobile patents battle with Samsung Electronics. On Friday, March 1st, a federal judge slashed a $1.05 billion jury award by more than 40 percent and set a new trial to determine damages. Here’s more:
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Statistical Confidence Can Help Pinpoint Value. Many questions have arisen concerning the reliability of valuations using the Direct Market Data Method (DMDM). Rand Curtiss shows how to use statistical techniques to answer them with confidence.
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Why Estate Planners Need to Understand This Critical Valuation Element of a Buy Sell Agreement All businesses with more than one shareholder should have a current, well-written buy-sell agreement, asserts Mercer Capital. And for clients with valuation processes as part of their agreements, it is critical to understand “levels of value”: Strategic Control Value, Financial Control Value, Marketable Minority Value, and Nonmarkettable Minority Value. Here’s more: