A Business Valuation Expert’s Perspective Drawing from a presentation at the 2025 NACVA BVFL Super Conference by Glenn Block and Greg Clark, this article explores key elements of effective engagement letters, common pitfalls, and practical examples to guide valuation experts in crafting robust agreements. In the ever-evolving landscape of business valuation and forensic accounting, engagement letters serve as a cornerstone of professional practice. As highlighted in the 2025 NACVA presentation by Glenn Block and Greg Clark, these documents are not mere formalities. Rather, they are strategic tools that can protect practitioners, clarify expectations, and ensure compliance with professional standards. Drawing…
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And How to Maximize It What truly influences value is the quality, consistency, and transferability of the earnings. Buyers are not solely purchasing a history of profitability; buyers are seeking future income that is sustainable and independent of the current owner’s direct involvement. Most business owners do not know what their business is worth. In many cases, they have never measured it in a formal or objective manner. Yet for most entrepreneurs, their business represents their single largest asset. It may be central to their retirement plan, their family’s financial well-being, or even their legacy. Despite its significance, the topic…
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A Key Component Used in Business Valuation For valuation purposes, net working capital involves a more comprehensive analysis than the straightforward traditional accounting definition of current assets minus current liabilities. This article examines the concept of net working capital and highlights its significance in business valuation. Net working capital represents a vital aspect of business valuation, as it influences a company’s enterprise value through projected cash flows, as well as its equity value based on excess or deficient net working capital at the valuation date. For valuation purposes, net working capital involves a more comprehensive analysis than the straightforward traditional…
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It is About Solving the Dollar Value Problem How do you price your business valuation engagement? What about a litigation support engagement? In this article, Rod Burkert discusses how to value your professional engagements. Let’s talk pricing. Specifically, why do we struggle to price the value of a business valuation? Or a forensic accounting assignment? Or the mother of all unknowns, a litigation support project? What makes, say, a $10,000 engagement worth $10,000? Let me give you two reasons why it is not worth $10,000. Your Hours Worked It is not worth $10,000 if you base your price/client cost on…
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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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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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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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Recognize Ethical and Professional Standards of Using AI AI is pervasive and promises to fundamentally transform business operations, education, and daily life. However, functional insights bridging the gap between AI and our industry have been lacking. The authors share their views on the ethical and professional standards implicated from the use of AI in forensics and valuation engagements. This article explores the need for, or lack thereof, to disclose the use of artificial intelligence (AI) technology in the fields of business valuation and financial forensics. AI is pervasive and promises to fundamentally transform business operations, education, and daily life. However,…
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A New Method of Doing Research The introduction of AI tools has empowered companies to streamline complex tasks, enhance accuracy, and offer real-time insights. One such company, IBISWorld, a leader in industry research, has taken a significant step forward with the introduction of its AI tool, “Phil.” This article explores the impact it will have on professionals working in business valuation, forensic accounting, and business consulting fields. As artificial intelligence (AI) continues to transform industries, market research is one of the fields most poised to benefit from these advancements. The introduction of AI tools has empowered companies to streamline complex…
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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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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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What is the #1 thing on your website that will convince a prospect that your firm is the right choice for a project? Rod Burkert shares his views on what is needed to go from zero to hero and land that engagement. Imagine I am a prospect for getting your BVFLS services. I found you on Google or LinkedIn. Or maybe I saw an article you wrote. Maybe heard a presentation you gave. Or maybe I got a recommendation from a colleague. It (almost) doesn’t matter. But now, I’m knocking at your website door. What is the #1 thing on…
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A Key Formula Used in Business Valuation Net working capital is a crucial component of business valuation since it impacts both a company’s enterprise value via its projected cash flows and its equity value via excess or deficient net working capital levels as of the valuation date. In addition, net working capital for valuation purposes is more nuanced than simply taking current assets minus current liabilities, as is often done when calculating net working capital in an accounting context. This article discusses what is net working capital and why it is important to value a business. When valuing a business,…
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The Principles of Conservatism in Action Most business owners understand the industry in which they operate and tend to be good at running the day-to-day operations. Yet, that does not mean they have made optimal decisions or that they have the necessary controls and financials in place that enable them to make sound financial decisions. Companies that do not keep high quality data will likely have a lower value. This article focuses on the data problems with the valuation of a sawmill that I recently completed; minor facts and circumstances have been altered to preserve client anonymity. Most business owners…
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Factors to Arrive at a Value that are Beyond the Three Approaches This article addresses valuations for buy/sell transactions with private buyers and private sellers. A business owner calls and says: I want to sell my business. Can you tell me what it’s worth? Thousands of these transactions are occurring daily. But before you go any further, stop and ask more questions. As business valuators, we are conditioned to crank out conclusions of value based on a pre-set series of steps like the hitch-hiker’s guide to the galaxy; the meaning of life, the universe, and everything is 42! But what…
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How to Manifest a Better, More Fulfilling Valuation Practice Several months ago, a friend of mine gifted the article’s author a book entitled The Seven Spiritual Laws of Success: A practical guide to the fulfillment of your dreams, written by Deepak Chopra. A few of the sections within the book hit home more than others and the excitement that has inspired the author to write the article herein. The author hopes that the article will prompt readers to incorporate more self-exploration into their valuation and forensic accounting practice. Several months ago, a friend of mine gifted me a book entitled…
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The Perils of a Party Doing their Own Business Valuation in a Dissolution Action Kwak v. Bozarth is an unpublished Massachusetts case. The trial court made several decisions based on unavailable data. The case illustrates the perils of a party in a martial dissolution acting as their own expert and underscores the importance of how the standard of review affects an appellate panel’s review of the trial court decision. Valuation professionals often say that valuing privately owned businesses is a blend of science and judgment. Kwak v. Bozarth, 2023 Mass. App. Unpub. LEXIS 179; 102 Mass. App. Ct. 1116; 2023…
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(Part V) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set upon drafting a white paper that would provide valuable insight to the future of the business valuation profession, with Chris Mercer taking the lead who is known by nearly every…
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(Part IV) To look to the future of the BV profession, we must explore the relevant dynamics within the industry. That starts with looking to our past to see what events and milestones brought us to where we are today, followed by ascertaining the economic and demographic trends leading us into the future, and culminating with identifying those trends which will have the greatest impact upon the profession. NACVA set upon drafting a white paper that would provide valuable insight to the future of the business valuation profession, with Chris Mercer taking the lead who is known by nearly every…
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Structured, Clear, and Well-Researched and Reasoned In a litigation setting, a well-written business valuation report can position your conclusion of value as credible. When completed for tax purposes, a well-written business valuation report can help avoid an IRS challenge. In any circumstances, a well-written business valuation report can provide the business owner with ways to increase cash flow and reduce risk. After business appraisers learn information about a business, research the economy and applicable industry(ies), analyze the financial statements, and estimate the value of the business, the work is captured in a report. In many cases, it is the business…