Most Business Owners Understand Interim Cash Flows. But Terminal Cash Flow May Be Most Important: More Detail on Standards of Value. Lucas M. Parris at Mercer Capital has authored a white paper at Mercer Capital that posted last month titled Understand the Value of an Insurance Brokerage that guides consultants through the process of selling out, selling in [transferring ownership to heirs], putting together buy-sell agreements, valuations for financial reporting and other ownership transfer scenarios.
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Keys: Talk to Existing Staff. Hire a Specialist Attorney. Don’t Negotiate Directly. Exercise Care—and Sleep on it Before Signing. James Doulgeris at Physicians Practice describes a common scenario where physicians agree to a buy out and later come to regret it:
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Plus: New Local Case Law in Los Angeles, San Francisco. Detail on Virginia Occupational License. Deloitte Tax Alerts notes new case law in Illinois and new local law in San Francisco and Los Angeles. Also: More on Virginia’s business, professional, and occupational license tax.
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Insurers Say Rates Can Surge After Hospitals Buy Private Physician Practices; Medicare Spending Rises, Too Anne Wilde Matthews at the Wall Street Journal reports that the increased number of physicians going to work for hospitals is actually resulting in higher costs for patients. Hospitals are acquiring physician practices and integrating them into hospital services, and while the stated goal is to improve care coordination, eliminate duplication of services and boost efficiency. However, Medicare and private insurers pay more for hospital services than the same service if done outside the hospital, such as in a doctor’s office. One example:
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Keys to Exit Excellence: Act Now, Begin the Grooming Process, Proactively Identify Potential Acquirers, and Create Value in Your Practice Donald J. Korn writes in The Journal of Accountancy that it’s critical to be proactive in building an exit plan. Here he talks to a number of experts on the topic—including NACVA member Marty Abo, who recently was featured in Smart CEO Magazine—and collects tips on best practices:
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Successful Exit Key to Current Performance—and Future Sponsorship Opportunities Chris Manderson at PE Hub writes that in the private equity world today, sponsors’ track records in successfully exiting investments are a major factor in fundraising. If sponsors cannot exit previous investments and provide returns, they will find it much more difficult to raise subsequent funds:
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Learn How the Pros Take Down an Embezzlement Scheme and Gather Tips on How to Best Defend Your Own Practice. Mark S. Warshavsky reviews Stephen Pedneault’s Anatomy of A Fraud Investigation. The book combines a step-by-step recounting of best practices with real-life drama as investigators discover, investigate, and resolve a fraud incident—a fantastic guide to how to defend against and uncover fraud.
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Taxes on S-Corporations are Hotly Discussed by Legislators and May Change. Here’s the History, Standing Precedents, and Current Law. S Corporations have been much in the news lately, as we’ve noted on the QuickRead blog. In this piece, Peter Agrapides provides a comprehensive chronological account of valuation cases where the issue of tax affecting S-Corporations has taken center stage.
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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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Authors of New Book Describe How Ability to Bring in New, High-Quality, Well-Paying Clients Consistently is Key Bruce H. Rogers and Russ Alan Prince are the co-authors of the just published book Profitable Brilliance: How Professional Service Firms Become Thought Leaders. At Forbes, the authors detail how a strong referral strategy is critical to a profitable, growing business, and that one of the best ways to build a referral network is by establishing yourself as a thought leader:
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Why Choosing Good Counsel to Help with Exit Planning Can Be the Most Important Decision a Business Owner Makes Venture Resources believes many business owners don’t fully appreciate the complexities and factors that are present in the deal structuring and business selling process, including understanding how to project the company’s future, applying alternate deal structures, and maximizing current business potential. Here are some tips.
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Good Mentors Not Only Catch Errors, but Speed Professional Development, Provide Perspective, and Help Build Your Company Brand The mentoring process is invaluable, explains Baria Jaroudi. That’s not simply because it provides a proofread and detail check, or even because it strengthens professional development and solicits team expertise and new perspectives. Perhaps most importantly, strong mentoring helps firms deliver the sort of work that builds a company’s brand, attracts new business, and defends the value of analyst work in a world of increasing automation.
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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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Avoid Hypotheticals. But Remember: Experienced Experts Recognize that Limited Evidence Will Often Support a More Limited Opinion Michael Kaplan explains how limited evidence can still support a limited opinion. Read about a valuator who had access to an insufficient number of documents and a hard cutoff date to complete a valuation by. Since the valuation was prepared in a manner that meets the professional standard of care, was generally in compliance with business valuation standards, and the expert’s approach and methodology was consistent with industry practice, the valuation stood up in court.
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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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Study: More Deals Occur in Countries That Follow Similar Financial-Reporting Standards At CFO.com Kathleen Hoffelder reports that dissimilar national accounting standards and the lack of adherence to international financial reporting rules seem to be a major deterrent to companies eyeing targets beyond their borders, according to a recent academic study. Moreover, cross-border acquisitions by companies of target firms in countries with similar accounting strictures tend to relieve CFOs and other senior executives of financial and administrative burdens, says Shawn Huang, assistant professor at the University of Arkansas and one of the survey’s authors, along with Jere Francis, a professor at…
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Few Companies with Under 100 Employees Have Fraud Controls in Place Small businesses are significantly more likely than their larger counterparts to neglect instituting basic antifraud controls that could save them from costly losses, a recent worldwide survey shows. The Journal of Accountancy reports in the August issue:
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The U.S. Must Cut $800 or $900 billion From Our Annual Government Spending to Maintain Mid-term Economic Solvency. And That’s Just the Beginning. Flooding the system with trillions of dollars and deficits has bought the U.S. economic stagnation, writes Rob Slee in an August 20, 2012 post at MidasNation. “What a lost opportunity. One thing we learned in MidasNation over the past few years is that when owners ignore the exponentially changing market and put their heads even deeper in the sand, only bad things result. Further, incremental actions will not change the equation for the better either.…
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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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Divorce Proceedings Can Stall Operations, Distract Key Employees, and Require Expensive Outside Counsel. Here’s How Good Planning Can Mitigate the Costs. Solid legal counsel, pre- and post-nuptial agreements, shareholder agreements, confidentiality, and structured settlements can all ease the strain on a small business during a divorce proceeding, explains Jennifer A. Brand at the Fox Small Business Center. Find out the details.