An Alternative to the IPO The popularity of special purpose acquisition companies (SPACs) has been soaring in recent years. There are 35 times as many SPACs operating in 2020 as in 2010, and these companies seem poised for greater exponential growth in the future. While many experts are predicting a continued, rapid increase in SPACs, this article will also examine the factors that could possibly slow SPAC growth and diminish their future prospects. The popularity of special purpose acquisition companies (SPACs) has been soaring in recent years. There are 35 times as many SPACs operating in 2020 as in 2010,…
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What Prospects Believe About Our Pricing is What We Believe About Our Pricing When prospects say, “You’re too expensive” (and some inevitably will), we may have a problem. Because on the one hand, they may be telling us the truth (or their truth). But on the other hand, we think we are worth it. This article identifies two issues, suggests that there may be one impediment, and provides readers with resources on the subject of pricing services. That is an impactful statement. And of course, it is not quite THAT simple. But it goes a long way toward explaining why…
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for SBA Lending Programs Despite the pandemic, the number of small businesses started continues to increase. This article discusses the various Small Business Administration (SBA) programs and the value of serving these lenders. “Success is a full-time job.” Grant Cardone Any entrepreneur or a small business owner would agree that running a successful small business is a full-time job. To run it well requires an enormous commitment of time and dedication. Over the last few years, the number of small businesses in the United States has continued to climb up. In fact, according to the U.S. Small Business Administration (SBA),…
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Creative Settlement Strategies for Real Property Damages In challenging financial and operational times, parties need more creative tools than ever before to reach settlement and bring swift resolution before issues can become protracted litigation. Particularly in the realm of real estate and environmental damages, where mass tort and class action lawsuits are common and the stakes can be very high, Value Assurance Programs and other solutions that leverage settlement funds and create opportunities for collaboration rather than conflict should be in every litigator’s repertoire. In challenging financial and operational times, parties need more creative tools than ever before to reach…
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Dieckman v. Regency GP LP et al. This article discusses Dieckman v. Regency GP, LP, a recent Delaware Chancery Court decision. It is a reminder for valuation professionals providing damages testimony to be wary when mixing the use of the market approach and income approach when estimating damages in situations where multiple entities are involved. For example, using the income approach in valuing the allegedly harmed subject company and then using a market approach for a similarly situated company that allegedly harmed the subject company (and vice versa). On February 15, 2021, Chancellor Andre Bouchard of the Delaware Court of…
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Operating v. Non-Operating Assets With the growth of the digital economy, new types of assets have emerged that may be subject to property division in divorce. An increasingly common example is credit card reward points. No one may actually “own” these points, since the written agreements for rewards programs commonly state that points are not the cardholder’s property, have no cash value, and cannot be transferred through a legal action (such as divorce). Even so, the points (which can be redeemed for cash, travel, merchandise, etc.) arguably have some value to the cardholder and thus can be considered marital property.…
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of a Tax Loss Target Company Acquisition This article summarizes the factors that acquirers—and their valuation and other financial advisers—should consider when structuring an M&A transaction that involves a target corporation with such income tax attributes. Introduction Valuation analysts and other financial advisers (collectively, analysts) are often retained to advise acquisitive clients with regard to proposed merger and acquisition (M&A) transactions. Such analysts typically focus on the pricing and structuring of the proposed M&A transaction. However, these analysts are expected to work with—and to support—the acquirer’s accounting, taxation, legal, and other professional advisers, particularly in the assessment of the risks…
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A New Online Board to Punish Infringers If you are a creative person, copyright protection is important. It gives you the right to prevent others from copying your work, which is a valuable right that can be used, sold, or licensed. This article discusses the enforcement protection afforded under the Copyright Alternative in Small Claims Enforcement Act of 2020 (CASE Act). If you are a creative person, copyright protection is important. It gives you the right to prevent others from copying your work, which is a valuable right that can be used, sold, or licensed. The good news is that…
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COVID-19 and Business Valuation—One Year Later: What Worked and What Didn’t On March 2, 2021, Jim Hitchner, Managing Member of Valuation Products and Services (VPS), made a follow-up presentation, COVID-19 and Business Valuation—One Year Later: What Worked and What Didn’t. This article summarizes the issues discussed during this follow-up webinar. A year has passed since the COVID-19 pandemic first impacted businesses. Business valuation (BV) practitioners preparing COVID-19 reports have grappled with how to incorporate the impact of this pandemic on the various industries and valuation reports. In this webinar, COVID-19 and Business Valuation—One Year Later: What Worked and What Didn’t,…
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These Drivers Quantify the Time and Money You Get from Your Practice Time and money. These are two things we generally want more of. Because they are generally two things, we think we don’t have enough of. If you want more time and money than you are currently getting out of your practice, this QuickRead deconstruction is for you. Time and money. These are two things we generally want more of. Because they are generally two things we think we don’t have enough of. If you want more time and money than you are currently getting out of your practice,…
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in the Cryptocurrency Economy Although cryptocurrency and blockchain technology create an environment that can help combat fraud within their systems, their introduction into the global economy has opened numerous doors for nefarious activity. This article provides an overview of what is cryptocurrency, blockchain technology, and the rise of threats to digital assets. Fraud used to be much simpler for the fraudster—they exploited weakness in the internal controls of a company and executed one or more transactions leading to theft of funds or property. Sometimes they concealed the crime; other times they felt no need to do so. Today’s world is…
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Employing Open Source Data, OSINT, and SOCMINT in the Due Diligence Phase Today’s accountants specialize in document management, research, money laundering, inter-national banking, e-discovery, and much more. They go even further. They ask to learn about open source research, cryptocurrency, and network-based financial transactions. In this article, the author discusses how to use public record resources, social media resources and open source monitoring in due diligence and business investigations to expose fraudulent business activities, locate assets, and gather undercover intelligence. Today’s accountants specialize in document management, research, money laundering, inter-national banking, e-discovery, and much more. They go even further. They…
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Put on the Gloves, Speak Bluntly, and Devise a Plan to Emerge from Chaos The author shares the trials and tribulations involving a troubled company that was on the verge of closing and managed to recover. In this engagement, he took the lead, coordinated and assigned roles within the company, negotiated with the IRS Revenue Officer, had difficult conversations with bank (a potential deal breaker), and was compensated. Introduction Saving a business creates one of the greatest highs you can have in accounting. Getting the Client I received a referral for a client in another state requiring a plane trip.…
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Why it Matters Distinguishing between enterprise (or business) goodwill and personal (or professional) goodwill can sometimes be difficult. That distinction is often necessary in marital dissolution and shareholder dispute cases, and when a business is sold. For valuation purposes, the classification is important because prospective buyers will only pay for goodwill that is transferable. In addition, there are tax implications associated with the classification. This article provides an overview of the importance of understanding how to classify goodwill and issues that arise in litigation. When is it Necessary? Distinguishing between enterprise (or business) goodwill and personal (or professional) goodwill can…
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Valuation Implications On November 20, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to modernize and clarify the Stark Law. The Stark Law governs those physicians (or their immediate family members) who have a financial relationship with an entity, and prohibits those individuals from making Medicare referrals to those entities for the provision of designated health services (DHS). Notably, the law contains a large number of exceptions, which describe ownership interests, compensation arrangements, and forms of remuneration to which the Stark Law does not apply. This article will focus on the definitional changes to commercial…
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Confessions of the Pricing Man, How Price Affects Everything Financial experts often struggle with setting fees for their own services and expertise. It is easy to see how someone could have trouble with decisions involving hourly billing versus fixed fees, premium pricing, bundling, discounting, and adjusting for scope creep. The author in this article shares insight from Hermann Simon on the above considerations. Financial experts often struggle with setting fees for their own services and expertise. It is easy to see how someone could have trouble with decisions involving hourly billing versus fixed fees, premium pricing, bundling, discounting, and adjusting…
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Apropos Restrictions of Data, Time, and Financial Resources When uncertainty rises to a level—where facts appear to be indistinguishable from fiction—business valuation, forensic accounting, and litigation support must prioritize the virtues of unimpeachable neutrality, integrity, and objectivity. These three virtues provide a means of best assisting the trier of fact in distinguishing that which is misleading from that which is centered upon the facts, data, and evidence regarding material matters, questions, or issues of fact or law. In a world where people consume and embrace fake news and alternative facts and deem those “truths”, the once highly valued authority of…
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If I Were Starting Today Business valuation and financial litigation services (BVFLS) practitioners—since the COVID-19 disruption—have embraced the use of social media. Yet, some BVFLS practitioners remain on the sidelines. In this article, Rod Burkert shares 10 social networking tactics he would use today to build his BVFLS practice. One thing I have seen since COVID-19 began is the uptick in social media usage by business valuation and financial litigation services (BVFLS) professionals … first, by those who were already using social media and who were amping up their efforts, and second, by those who were not previously using social…
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the Value of a Business Buyers look at earnings as a primary driver of value. There are many other factors such as strategic value, competitive position, branding, secret processes, and cost to duplicate. There are also many other factors, some not so evident or obvious, some intangible and some in the “good feelings” attitude about the business or its prospects. At the end of the day, it is sometimes hard to pinpoint exactly what made the difference for the buyer to close on the transaction. This article presents 64 items that can either increase or enhance a business’ value, or…
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Accounting Challenges and Judgments Topic 606 of the FASB’s Accounting Standards Codification (ASC 606) dictates the timing and amount of revenue companies recognize for a given transaction. ASC 606 requires companies to identify performance obligations in contracts with customers and allocate the transaction price among those performance obligations. Revenue is recognized when control of an asset is transferred to the customer. For many transactions, revenue recognition is a complex reporting exercise that requires careful application of judgment to contractual provisions and assumptions about market conditions. This article illustrates some of the complicated revenue recognition questions that can arise for vaccine…