Theory to Practice VPS StraightTalk Webinar, June 15, 2023 This article summarizes key takeaways from the June 15, 2023, VPS StraightTalk Webinar presentation co-led by R. James Alerding, CPA, ABV and Carli D. Lehr, CPA, CVA, CSEP. The speakers discussed how to differentiate between a projection and forecast, the importance of developing a reliable cash flow or projection evaluation of specific risk to the overall valuation, lessons from court cases regarding the use of forecasts, and what valuation standards say about the use of prospective financial information in business valuations. This article summarizes key points. Business valuation analysts spend a…
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Theory to Practice VPS StraightTalk Webinar, June 15, 2023 This article summarizes key takeaways from the June 15, 2023, VPS StraightTalk Webinar presentation co-led by R. James Alerding, CPA, ABV and Carli D. Lehr, CPA, CVA, CSEP. The speakers discussed how to differentiate between a projection and forecast, the importance of developing a reliable cash flow or projection evaluation of specific risk to the overall valuation, lessons from court cases regarding the use of forecasts, and what valuation standards say about the use of prospective financial information in business valuations. This article summarizes key points. Business valuation analysts spend a…
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Business economists have grown a little less optimistic about the outlook for the U.S. economy as a result of U.S. trade policies. The National Association of Business Economists reports that its survey of 45 professional economic forecasters now projects a median 2.8% growth in real GDP from Q4 2017 to Q4 2018, down from 2.9% three months ago. To read the full article in Think Advisor, click: A Mixed Outlook for the U.S. Economy.
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The Present Value of Future Lost Profits, and the Time Value of Money Experts estimating the present value of a business’ future lost profits have much less direction from the courts than their counterparts estimating the present value of a person’s lost earning capacity. Professional literature has attempted to fill this gap providing many articles discussing the differing methods for analyzing lost profits (e.g., yardstick, before-and-after, but for) or how to determine the discount rate by applying a weighted cost of average capital, equity rates of return, or some form of risk premium build-up. This article moves away from these…
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The proper usage of company management-prepared projections when applying the Income Approach—Discounted Cash Flow Method—is an ongoing issue for any valuation analyst, especially as it relates to shareholder appraisal rights actions. The Delaware Chancery Court regularly provides guidance as to the proper usage of management projections when applying the Discounted Cash Flow Method within a dissenting shareholder appraisal rights action. This article highlights several historical and recent Delaware Chancery Court decisions, and it provides insights into the valuation analyst’s role in properly utilizing management projections when applying the Income Approach—Discounted Cash Flow Method—within a dissenting shareholder appraisal rights action.