Valuation Discounts Considered in Gift and Estate Planning With a look forward to December 31, 2025, when the current lifetime exclusion levels for estate taxes are slated to sunset, wealth planners and their clients have much to discuss. Valuation and estate planning professionals have a key opportunity to strategize and develop the best plans for family businesses and high-net-worth individuals. With a look forward to December 31, 2025, when the current lifetime exclusion levels for estate taxes are slated to sunset, wealth planners and their clients have much to discuss. They have a key opportunity to strategize and develop the…
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Freedman Normand Friedland LLP v. Cyrulnik—On the Valuation of Contingency Fee Cases and Qualifying as a Fee Expert When there is a consistent and predictable stream of cash flows or a history of royalties for licensed intellectual property, the valuation professional is most comfortable. In the following case, the court addressed admissibility of a valuation expert who was attempting to value an alleged interest in a law firm’s contingent fee cases—the epitome of uncertainty. The article discusses this court decision. The business valuation profession thrives on certainty and predictability. When there is a consistent and predictable stream of cash flows…
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Under Complex Considerations In Part I of this series, the article presented the fundamental standards used to gain a basis of understanding renewables and valuation drivers. These were presented in the context of an appraisal of wind rights and what would be included, as an example, in a valuation engagement. This second article focuses on the diminution of land values resulting from collateral damage from wind turbines and solar siting and placement impacting highest and best use of the subject property. In Part I of this series, the article presented the fundamental standards used to gain a basis of understanding…
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Beyond Just Updating on the Progress of the Project An informed client is usually a better client. In this article, Rod Burkert shares five reasons calling a client on a Friday is a worthy practice. The phone rings. You recognize the number on caller ID. It’s. THAT. Client. The one you took a retainer from a few weeks ago and who hasn’t heard from you in a while. You know the conversation is going to be awkward. Do you answer the phone? Or let the call go to voicemail? The answer to the question is that you don’t DO anything.…
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A Series on Managing Uncertainty and Fear (Part II) Clients may feel isolated or overwhelmed by financial decisions. Create an environment where clients feel safe asking questions and expressing concerns. Make sure to include attorneys, financial planners, etc. to provide comprehensive support. The author, in this second part of the series, shares his strategies to address uncertainty and fear. Read Part I here. By combining technical rigor, clear communication, and collaboration, financial experts can mitigate the fear and uncertainty that often accompany financial decisions. This balanced approach helps clients feel informed, empowered, and supported throughout the process. As a financial…
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In Small Business Valuations In a recent joint business valuation review engagement, the author and a fellow appraiser discussed whether one should use market value of invested capital (MVIC) or enterprise value (EV) when applying an income approach in business valuation. In this article, the author discusses these two concepts and sheds some light on why one might use one over the other. A recent joint business valuation review engagement sparked hours-long discussion between myself and a fellow appraiser about whether we should use market value of invested capital (MVIC) or enterprise value (EV) when applying an income approach in…
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Why AI may Undermine Your Credibility as an Expert Witness In a recent New York Surrogate’s Court decision (Matter of Weber, 2024 NY Slip Op 24258), an expert witness’s reliance on Microsoft Copilot for financial calculations led to a notable exclusion of their testimony. The court highlighted the risks of using generative AI for evidence-based tasks, marking a significant moment for experts in accounting and other fields that demand high standards of accuracy and verifiability. This article discusses the case, as well as the risks and limitations of using AI. In a recent New York Surrogate’s Court decision (Matter of…
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Financial Due Diligence Preparation and readiness for the sell-side process will contribute to maximizing the value of your company and mitigate the risk of surprises at the critical stages of the proposed transaction. The author shares what to expect in a sell-side engagement and what can be done to exit successfully. You have considered the pros and cons to selling your manufacturing and distribution (M&D) business and have decided that the time is right to sell. Many entrepreneurs fail to realize that proper and timely planning and preparation for the “sell-side” process is critical to consummating a successful, timely, and…
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From $600 to Over $1 Billion The EU General Data Protection Regulation (GDPR) and other data protection regulations apply to the smallest sole practitioner firm among us to the largest and each must take steps to implement a cybersecurity plan, to follow it, and to respond when an incident occurs. The failure to provide protection can result in fines. In this article, the author describes why Amazon and Google were fined under the EU’s GDPR. For the past five years, organizations have been dodging and weaving the myriad data protection regulations spawned from the EU’s General Data Protection Regulation (GDPR).…
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Part II of II In the previous article, we posed a series of questions to consider when purchasing cyber insurance. In Part II, the authors identify not only how to answer some of the questions posed initially, but also, what value those answers bring. Moreover, the authors identify some of the common gaps and how to address them. Introduction In the previous article, we posed a series of questions to consider when purchasing cyber insurance. Our approach was deliberate: the right questions help get you the right insurance to address cyber risks facing your organization. Remember, seek the right coverage…
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Federal Rules and Regulations Governing ESOPs Business valuation reports of employer’s securities owned by ESOPs are subject to review by plan fiduciaries, government agencies, and IQPAs auditing the ESOP’s financial statements. Each of these readers have their own responsibilities to the participants and beneficiaries of the plans. This article will examine the federal rules and regulations governing ESOPS, the responsibilities of the report readers, and the use of the report as audit evidence. Introduction Business valuation reports of employer’s securities owned by Employee Stock Ownership Plans (ESOP) are subject to review by plan fiduciaries, government agencies, and independent qualified public…
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Part I of II When companies suffer a cyber incident, they often look to their insurance policy for coverage to help mitigate financial exposure. Additional external resources also help the insured get back to normal operations. Part I of this series poses several questions to assist insureds or policyholders in thinking through the common issues. Part II will present some strategies to help organizations further reduce their risk posture. Introduction Cyber risk is now a normal part of our personal and professional lives. When companies suffer a cyber incident, they often look to their insurance policy for coverage to help…
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Techniques Used in a Wind Power Valuation Engagement This article is aimed at valuing renewable interests or rights which is straight forward requiring basic application of valuation techniques. Appraisals that consider diminution of land estate values, damage assessments, complex end of life considerations, repowering analysis require more specific analysis and build up methods to establish defensible valuations. This article, part of a two-part series that focuses on renewable energy valuations, is written to provide a foundation for the novice appraiser who wishes to better understand renewable assets and the specific components that comprise a valuation. The forthcoming article will provide…
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Assessing the Engagement Prospect In this article, the author shares how he crafted an engagement letter that enabled him to earn far more than a fee he was prepared to accept. Understanding a prospect’s motivation and the underlying facts enabled him to craft an engagement letter that worked for both and earned him $10,000 more. By listening to my prospect and understanding the pain he was in, I crafted an engagement letter with three pricing options that provided the solution he needed. It resulted in me getting a $10,000 higher fee based solely on my report delivery date. Quick Background…
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An Overview of the Physician Compensation Surveys Beginning in late May each year, numerous industry normative benchmark physician production and compensation surveys begin publishing the most recent year’s reports. When consulting benchmarking survey data for assessing physician compensation arrangements for FMV, it is important to understand and critically evaluate the quality of the data. This article provides and overview of these surveys. It is the most wonderful time of the year—Survey Season! Beginning in late May each year, numerous industry normative benchmark physician production and compensation surveys begin publishing the most recent year’s reports. These healthcare and specialty specific surveys…
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Frequently, the competing attorneys are inadequately equipped to educate the mediators and arbitrators about the salient facts and the governing legal issues in dispute. Consequently, trial courts increasingly have encouraged attorneys to involve their experts in the ADR process. The author describes the expanding role the expert witnesses may and should have in ADR. Civil litigation has become increasingly complex and civil dockets have become far more congested because of the COVID-19 pandemic. To avoid the expense and delay of litigation in civil cases, trial courts and litigators have turned to alternative dispute resolution (ADR) in the forms of mediation…
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Using Forensic Accounting Skills to Your Advantage When valuing a business, one essential step in the process is to review and analyze the subject company’s historical financial information. This information allows a business valuator to analyze the company’s past performance and pinpoint trends in the business to forecast its future performance. The author in this article shares his opinion regarding items that a business valuator may encounter in an engagement that merit normalization. When valuing a business, one essential step in the process is to review and analyze the subject company’s historical financial information. This information allows a business valuator…
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Connelly v. United States—Do Redemption Agreements Create a Business Liability? Most have some form of agreement and financing in place to address sudden changes in ownership. In Connelly v. United States, a unanimous U.S. Supreme Court may have turned many of those plans on their heads. The question before the Court was whether a redemption agreement created a liability to the company. The author discusses the decision and impact it may have on succession planning. One of the great challenges for privately held businesses is dealing with the unexpected departure of an owner, whether by disability or death. Most have…
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Ryan LLC v. FTC On August 20, 2024, a Texas federal judge stopped the FTC’s ban on noncompete agreements from going into effect on September 4, 2024. This decision comes after the FTC issued a final rule on April 23, 2024, that bans employers from imposing noncompetes on their employees. The FTC asserted that this exploitative practice kept wages low and suppressed new ideas. While the FTC’s ban will affect all industries—not just healthcare—it comes at a time when healthcare employers across the U.S. are struggling with staffing shortages. This article delves into the decision and ramifications of the decision.…
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Unimpeachable Neutrality in the Age of Artificial Intelligence The world of economic damage and business valuation is evolving rapidly, with artificial intelligence (AI) poised to become an indispensable tool for financial expert witnesses. As with any technological advancement, its use and implementation with regards to expert opinions, conclusions, and testimony must be handled with unimpeachable neutrality, a hallmark of credibility in the courtroom. This 19th article of the Unimpeachable Neutrality Series explores how financial experts can integrate AI into their practice while maintaining unimpeachable neutrality, integrity, reliability, and professionalism. The world of economic damage and business valuation is evolving rapidly, with…