Tests of Reasonableness Business appraisers use tests that ask whether decisions made are legitimate and designed to remedy a certain issue under the circumstances. These tests are commonly referred to in the valuation literature as tests of reasonableness. Several methods have been suggested and employed (e.g., purchase justification test), but limited literature speaks to the use of a test of reasonableness for company specific risk premia (CSRP). This article explores data sources and analyses available to appraisers to provide a “test of reasonableness” to increase the confidence level and analysis of their CSRP analysis. Business appraisers use tests that ask…
-
-
What Forces Drive the Competition in the Industry? The author of this article shares his thoughts on the book, Competitive Strategy: Techniques for Analyzing Industries and Competitors. This was a book he had read sections of during his university days, but this time around, read it with a new vantage point considering his education and experiences since then; particularly in the business valuation field. He notes that Porter reminds the reader of an important question: “What forces drive the competition in the industry?” and observes in the litigation reports this question is often not addressed. This is a potential problem…
-
Elements of the Valuation Analysis (Part II of V) This second article of the five-part series on Intellectual Property Valuations summarizes the typical elements of the intellectual property valuation analysis. This part of the discussion focuses on benchmarking and the use of research databases. [su_pullquote align=”right”]Resources:Intellectual Property Valuations: The Relief from Royalty Method (Part I of V)[/su_pullquote] Introduction This five-part series of discussions introduces the market approach and the relief from royalty (RFR) method of intellectual property valuation. Part one of this discussion introduced the typical types of intellectual property and the generally accepted intellectual property valuation approaches and methods.…
-
or a Ball and Chain In this article, the author discusses his views on how to value a funeral home.
-
A help or hinderance? On July 1, 2013, FASB issued exposure drafts calling for public commentary on three proposals that address private company stakeholder concerns. Two proposals involve accounting for identifiable intangible assets and goodwill acquired in business combinations. In this article, Mark Zyla analyzes the proposed changes, including potential concerns, and their far-reaching impact on the industry, as well as private and (in 2014) public companies.