The Importance of Growth Assumptions in Delaware Appraisal Rulings An important input to many valuations for disputes in the Delaware Court of Chancery is a business’s terminal value; the future value of a business that reflects all the cash flows expected to occur after the period for which management or analysts typically prepare cash flow projections. In this Q&A, the article’s authors explain how the assumptions underlying such calculations affect the valuation results when employing different valuation methodologies. In valuation disputes, adjudicators critically examine the methods and assumptions used by opposing experts when estimating a business’s future value. An important…
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Beyond Heating and Cooling From coast to coast and everywhere in between, HVAC plays a critical role in economic performance and presents compelling opportunities. This article discusses factors business valuators must consider when they are engaged to value HVAC companies. Heating, ventilation, and air conditioning (HVAC) services are not only essential, they are foundational to modern comfort and thriving businesses. The history of HVAC is rich with innovation, and so is the craft of valuing HVAC companies. From coast to coast and everywhere in between, HVAC plays a critical role in economic performance and presents compelling opportunities whether you are…
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Self-reflection and the Engagement Process The buying process begins when a prospect or a referral source considers you for a new engagement, or when a client considers you for a repeat performance. In this article, Rod Burkert reflects on this aspect of the engagement process. The buying process begins when a prospect or a referral source considers you for a new engagement, or when a client considers you for a repeat performance. And it almost always begins with the same question (or thought) from the buyer: What do I get by hiring you? So, what does that prospect, referral source,…
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In First Month of 2025 In the first month of 2025, hospital revenue and expenses both increased, balancing each other out and resulting in continued steady financial performance for hospitals, according to Kaufman Hall’s January 2025 National Hospital Flash Report. This article reviews the report and the current state of hospital operations. In the first month of 2025, hospital revenue and expenses both increased, balancing each other out and resulting in continued steady financial performance for hospitals, according to Kaufman Hall’s January 2025 National Hospital Flash Report.[1] Revenues grew more quickly in the inpatient setting, as more patients were treated…
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Forecasting Errors One of the common pitfalls in applying the income approach is committing forecasting errors. To understand the impact of this error, this article discusses the importance of the income approach in business valuations and areas that require careful evaluation. One of the common pitfalls in applying the income approach is committing forecasting errors. To understand the impact of this error, let us first discuss the importance of the income approach in business valuations. Unlike the asset-based approaches, which primarily focus on the value of a company’s tangible assets, the income approach considers the earning potential of the business.…
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Gemini 2.5 Pro EXP Shines and Your Shortcut to Staying Current Just like I predicted in my last post, the AI chatbot race is heating up, with models leapfrogging each other constantly! This time, Google’s new Gemini 2.5 Pro Experimental made a splash, and based on my own quick test, it is impressively capable. [Check it out here: https://deepmind.google/technologies/gemini/pro/] Putting Gemini 2.5 Pro to the Test I gave it a real-world challenge: write Python code to pull data from a CSV file into an MSSQL database. Honestly, it blew me away. In roughly five minutes, it churned out 379 lines…
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Strategic Gifting Before 2026 The Tax Cuts and Jobs Act of 2017 presented an opportunity by significantly raising lifetime gift and estate tax exclusions, but this window is closing soon. With the exclusions set to expire at the end of 2025, there is an urgency to plan your gifts sooner than later. Imagine it is December 2025, and you have a chance to gift $14 million to your children without incurring a single dollar in federal gift tax. Fast forward just one day to January 1, 2026, and that same gift could trigger a whopping $2.8 million in taxes. This…
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What is an Injured Party Worth? The Forensic and Valuation Services division of the AICPA and CIMA issued a Practice Aid in 2020 on Measuring Damages Involving Individuals. This Practice Aid supersedes AICPA Forensic and Valuation Services Practice Aid 98-2, Calculation of Damages from Personal Injury, Wrongful Death, and Employment Discrimination. This NACVA QuickRead article provides a summary of the updated Practice Aid. Introduction The Forensic and Valuation Services division of the AICPA and CIMA issued a Practice Aid in 2020 on Measuring Damages Involving Individuals. This Practice Aid supersedes AICPA Forensic and Valuation Services Practice Aid 98-2, Calculation of…
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Just like flipping a switch to turn on a light, most of us do not think about what had to happen to make that light turn on. Artificial Intelligence (AI) has already become as effortless as a light switch. You type a prompt into ChatGPT or Copilot, and it returns an answer, yet you likely have no idea how it works or what went into making it function. Unlike understanding electricity or the internet, grasping AI requires a foundational knowledge of its mechanics. While the full explanation is more complex than I can cover here, let’s break down some basics.…
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Healthcare Policy Edition During his two months in office, President Trump’s administration has called for significant changes at a fast and furious pace, with several healthcare agencies and programs across the U.S. Department of Health and Human Services (HHS) targeted. To keep up with the latest actions of the legislative and executive branches of the federal government, this article summarizes recent events in Washington and the impact of these changes (both imminent and impending) on providers and patients. During his two months in office, President Donald Trump’s administration has rolled out edicts calling for significant changes at a fast and…
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Matter of Weber—Challenges to a Trustee’s Accounting Go Awry Serving as a Trustee of a Trust is difficult. In the case presented, a trust beneficiary alleged that the trustee—his aunt—breached her fiduciary duty. The trust beneficiary retained an expert in connection to this claim and this did not go well for either the beneficiary or damages expert. The article summarizes the case, provides a road map and an admonition to experts in these types of cases regarding what is needed, and the perils of using AI. British mathematician, Hannah Fry, once said, “People are often quite lazy. We like taking…
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Is AI the Death of Professional Judgment or its Reincarnation Only with careful oversight and the application of seasoned professional judgment can AI deliver results that are not only accurate but also defensible and unimpeachably neutral. This article in the Unimpeachable Neutrality Series explores the indispensable role of professional judgment, particularly as it intertwines with the capabilities of AI. The advent of artificial intelligence (AI) has brought a seismic shift to the field of valuation and forensic accounting. Data that once required weeks of meticulous analysis can now be processed in mere minutes. While AI’s outputs relative to financial modelling…
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Take Up an Informed Contrarian View to Disrupt the Business Valuation Profession What frustrates you about our industry? Do you think your prospects, clients, and referral sources might feel the same way? What if you took a stand? What if you stood out by promising something different than the standard operating procedures your competitors follow? What frustrates you about our industry? There must be something you don’t like about why or how we do what we do. Do you think your prospects, clients, and referral sources might feel the same way? What if you took a stand? What if you…
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Guidance from AICPA’s 2024 Accounting and Valuation Guide—Business Combinations There are various methods used to value intangible assets. The relief from royalty method is based on the premise that there are royalty savings if the acquiror acquires the asset instead of licensing it. The value of the asset is calculated as the present value of after-tax royalty savings over the economic life of the asset. This article delves into the available methods used to value brands. When a company acquires another company, the acquiror may need to perform a purchase price allocation. In essence, the purchase price allocation (PPA) analysis…
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And the Trump Administration’s Freeze This article is the latest installment of QuickRead articles on ESOP regulations. Specifically, it focuses on the request, and status thereof, for the Department of Labor to clarify “adequate consideration” for the valuation of entities held in ESOPs. This article is the latest installment of QuickRead articles on ESOP regulations.[1] Specifically, it focuses on the request, and status thereof, for the Department of Labor (DOL) to clarify “adequate consideration” for the valuation of entities held in employee stock option plans (ESOP). On January 20, 2025, President Trump issued an Executive Order freezing all former President…
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What are a Self-Employed Person’s Earnings? What are Their Profits? This article will discuss some of the unique factors relating to assessing lost profits for self-employed operated businesses. As examples, two extremes will be discussed. These extremes provide virtual bookends when assessing a claim of lost profits by a self-employed person. The first addresses a self-employed person who reports his/her income through a Schedule C, Sole Proprietor. The second addresses self-employed individuals that own and operate a subchapter S corporation and file an 1120S for that business. Financial experts will often be asked to estimate the lost earnings or lost…
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Addressing the Value and Professional Standards Issues in the Engagement Resolving a shareholder dispute often requires determining the value of a shareholder’s interest in the business. This article provides a framework for the business valuation expert to discuss this issue with attorneys and clients. Headings organize the questions and issues. Resolving a shareholder dispute often requires determining the value of a shareholder’s interest in the business. This article provides a framework for the business valuation expert to discuss this issue with attorneys and clients. Headings organize the questions and issues. Is the Juice Worth the Squeeze? This is the main…
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AI Insights Not to Be Ignored In 1997, I was invited to be a guest speaker at a local heavy equipment dealers association dinner at Tuscany in Salt Lake City. The dinner was amazing, but then it was my turn to speak about the changing landscape of this new thing called the “Internet.” I explained that e-commerce would disrupt everything. I told them the day would come when anyone would be able to buy heavy equipment online. I was basically laughed off the stage as they explained why this would never happen with heavy equipment. Well, here is the mini…
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Common Practices in Florida, Value Enhancement Strategies, and Market Positioning How are day care and early learning centers valued? In this article, the author shares her thoughts on how these are valued in Florida. In addition, the author shares strategies to enhance the value of the business. “If children are the world’s greatest investment, then daycares are the blue-chip stocks of our future—steady, essential, and always in demand.” Valuing daycares and early learning centers is a dynamic and compelling area driven by multiple factors that influence their market value. Across the country, families face limited access to childcare, making…
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Strategies to Limit Digital Risk and Liability In this article, the author looks back at predictions made in the 2014 Pew Research. Reflecting on this study, it becomes self-evident that we understand what the problems are, and, perhaps, we even have good ideas of how to tackle these problems. Therefore, the issue is not necessarily “finding a solution” but rather, having the will and desire to implement a solution. Introduction A person’s perspectives and perceptions towards a problem drives the approach taken to solve that problem. Managing data privacy challenges are no different. Therefore, to address today’s issues, it is…