Willamette Management Author Explains: What You Need to Know About DLOMs Aaron Rotkowski explains why it’s appropriate to apply a DLOM to a controlling ownership interest—and how to figure it—and why it doesn’t make sense to rely on restricted stock studies and pre-IPO studies to estimate the DLOM for that interest. Find out more.
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IFRS News Offers Summary of Significant Developments in International Financial Reporting Standards (IFRS) Grant Thornton’s IFRS team publishes a quarterly update on developments in the international accounting arena:
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WhitServe Alleges that Mac OS X Infringes on a Patent it Holds for “Sequentially Opening and Displaying Files in a Directory.” Steve Musil at c:net reports that WhitServe, which owns intellectual property but doesn’t make any real products, is suing Apple over allegations that versions of the Mac OS X operating system infringe on a file viewer patent it holds: The complaint, filed today in U.S. District Court in Connecticut, claims that Apple’s Quick Look violates Patent No. 7,921,139, a system for “sequentially opening and displaying files in a directory.”Introduced in 2007 with Mac OS X Leopard, Apple’s Quick Look allows users…
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Federal Agency Identifies Valuation Risk Factors and Best Practices Could the Securities Exchange Commission’s informal inquiry regarding valuation be an opening salvo to allow more formal investigation, or even regulatory action? The McLean Group shares an in-depth analysis of the SEC’s findings.
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Valuators Must be More Than “Lucky Punks” How can appraisers best figure the cost of equity capital? Rand M. Curtiss argues that using standard tools including Ibbottson, Duff & Phelps, CAPM, or the Butler-Pinkerton model aren’t enough. What to use instead? Curtiss suggests starting with a look at the rate of return on mezzanine money and the rate of return on later-stage VC investments. Find out why.
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Critically Assess Underlying Data and an Appropriate Method for Value Determination Richard Claywell regularly reviews business valuations that seem to consider the asset, market, and income approaches in forming an opinion, but that never explain or justify a weighting methodology used to arrive at a final value conclusion. Here’s why that’s a mistake.
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Appeals Courts in Iowa and Mississippi Settle Divorce Disputes The Mississippi Court of Appeals reverses a trial court’s ruling in Marter v. Marter because of a valuation without sufficient evidence, and the Iowa Court of Appeals affirms the value of a wife’s intangible contributions to a business in re Marriage of Kinser.
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Should Losses Trigger an Immediate Charge or Later Write Down? The Financial Accounting Standards Board (FASB) is engaged in an interesting discussion with the International Accounting Standards Board (IASB) regarding how quickly bad loans need to be recognized by banks. Here’s the essence of the dispute.
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Fairness Opinions Help Mitigate Conflicts of Interest, Establish Transaction Credibility, and Avoid Unfavorable Tax Issues Brian A. Sullivan and Andrew C. Smith discuss how you can leverage fairness opinions to mitigate conflict of interest, avoid unfavorable tax issues, and help secure acceptance of transactional decisions by minority shareholders.
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New Operational Risk Thinking Can Help Predict and Prevent Disasters of a Global Scale and Improve Bottom Lines as Well In an interview with Renee Boucher Ferguson of the MIT Sloan Management Review, Kathleen Long discusses some of the threats operational risk can pose to a company and how her company, Montage Analytics, is helping businesses combat these dangers.
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At Stake was Client Confidentiality The Appraisers Guild reports on an important bit of recent case law. On August 10, the Arizona Board of Appraisal dismissed the USPAP violation complaint filed by Chase Bank against John Dingeman on initial file review. Why is this newsworthy? Because it represents a major victory for appraisers everywhere. Dingeman, has been fighting strong arm tactics employed by Chase Bank in an attempt to force him to violate Client confidentiality by discussing details about an appraisal on a no-defunct loan that Chase acquired. More:
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ESOPs serve as a utilitarian strategy for business owners looking for unique and effective ways to improve employee benefits and business flexibility. William Stewart explains how an ESOP, depending on how you set it up, can function like a Swiss Army Knife. Depending on how you set it up, an ESOP is fully flexible. ESOPs, for instance, offer buyers and sellers a wide range of purchasing options that can vary from a minority stake to a full-fledged buyout. Once you decide on the size of the deal, you can also determine how much of the deal is done in assets…
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UConnect v. Facebook Showed How 409A Valuations Can Destroy Value. Here’s What Shareholders and VCs Need to Know—and Some Ideas About How to Better the Situation. Lorenzo Carver previously explained how 409A valuations destroy value for shareholders receiving grants, and provided a case study of how this all played out in UConnect v. Facebook. In this final article in a three-part series, Carver presents us with thoughts on who pays the price when a valuation is overvalued, what some of the causes of today’s status quo are and some specific suggestions on practices our industry might adopt to fix the…
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The Risk-Free Rate is the Cornerstone in Finance for Estimating both the Cost of Equity and Debt Capital. In corporate finance and valuation, both academics and practitioners have long used government security (U.S. Treasury Bills and Bond) rates as proxies for risk-free rate of return. How do credit downgrades affect the risk-free rate for private company valuators? Anthony Banks explains.
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The Winklevoss Twins Realized Too Late the Value They’d Agreed to for Their Common Shares of Facebook. Here’s How it Played Out. Last week Lorenzo Carver introduced the topic of how 409A valuations destroy value for some shareholders. Today’s piece is a case study in how a wide disparity in value estimates largely created by the 409A process played out in the UConnect v. Facebook lawsuit.
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Why Built-up Volatility Rates Produce Better Value Indications In part one of a three-part series, Lorenzo Carver explains how the interaction between auditors and valuation professionals during dual-purpose 409A valuations of common stock and employee stock options destroys value for hundreds of thousands of employees receiving stock options every year by granting options at strike prices that are above the fair market value of the underlying common stock.
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Arizona Board of Appraisal Dismisses USPAP Complaint Filed by Chase On August 10, the Appraiser’s Guild blog reports, the Arizona Board of Appraisal dismissed the USPAP violation complaint filed by Chase Bank against John Dingeman on initial file review:
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Acquiring Companies Need to Conduct a Brand Valuation Post-Acquisition to Comply with IFRS. Here’s Why it Makes Sense to Do it Before the Acquisition. As all companies complying with IFRS must carry out a brand valuation post acquisition for compliance, there’s a strong argument for carrying out the necessary due diligence and valuation beforehand, explains the marketing director of Intangible Business, in a piece first published in Finance Week. Valuing brands pre-acquisition helps management determine how much to pay, it can help finance the deal, prepare the team for integration and identify opportunities for the brand. Seeing as…
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Infosys, the Indian IT Services Giant, Has Assigned a Value to Its Entire Workforce Since 2008. Here’s Why European and American Companies Don’t Yet Formally Value Employees—and Why They Should! Recognizing the value of employees in company accounts makes a compelling business case and reflects the realities of 21st century business, argues Leon Kaye in the Guardian.
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New Rule Intended to Help Inform Mortgage Applicants of How Value Is Determined The Consumer Financial Protection Bureau (CFPB) released Wednesday a new proposed rule that would require mortgage lenders to provide home loan applicants with appraisal reports to determine how the value of a property was determined, reports Tory Barringer at DS News, an outlet that focuses on the mortgage default servicing industry. CFPB proposed the rule in response to a provision of the Dodd-Frank Act that requires creditors to provide mortgage applicants with a copy of written appraisals and home value estimates. The newly-proposed rule would require that…