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Legal Update: Rosenthal v. Erber

Rosenthal v. Erber illustrates the pressure and perils of dueling experts. The expert is charged with assisting the court ascertain the facts, rather than furthering the client’s ambition. The case is a reminder to business valuation professionals that ethical considerations are paramount and that doing the contrary leads to courts’ suspecting the role of experts in the process. In the main, valuation exper ...

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Company Specific Risk Premia

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 reasonablene ...

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Considerations in the Valuation of Alternative Asset Management Firms and Carried Interest

Issues in Hedge Fund Valuations The proliferation of hedge funds presents an opportunity for valuation analysts. In this article, the author provides an overview of the hedge fund industry, compares the manner in which hedge funds operate vis-Ă -vis private equity and venture capital, and outlines the opportunities and challenges for valuation analysts interested in serving this market sector. ...

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Capitalized Earnings: When are the Earnings Stabilized?

Capitalized Earnings: When are the Earnings Stabilized? When you're doing a business valuation, should you use a Capitalization of Earnings/Cash Flows? Or should you use a Discounted Earnings/Cash Flow method? Here's a rule of thumb: If the benefit stream will be constant over time, choose the Capitalized Earnings/Cash Flows. Richard Claywell explains. ...

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