• QuickRead Top Story - Valuation/Appraisal

    The Bankability Method

    April 22, 2026

    Ensuring SBA 7(a) Financing Success to Close a Small Business Sale The bankability method is an approach the author has developed using the income method of valuation, primarily for companies valued at $5 million and below, to assess the business can be financed under SBA 7(a) and sold. In the articles, the author describes the method and reasons for it being used. The bankability method is an approach I use under the income method of valuation, primarily for companies valued at $5 million and below. These businesses are typically sold to individual buyers—often solo entrepreneurs—who rely on bank financing, most…

  • QuickRead Top Story - Valuation/Appraisal

    SBA 7(a) and 504 Loans

    April 30, 2025

    How Business Valuations Drive Smarter Lending Decisions This article provides a case study that highlights the methodology behind SBA-compliant business valuations. The article underscores the importance of grounding the analysis in standard valuation techniques, using reliable industry benchmarks, and properly documenting adjustments. The role and value of business appraisers to the lender and parties involved in a potential SBA-financed transaction is also discussed. Business valuations play a vital role in SBA financing. For both 7(a) and 504 loan programs, an independent business valuation is typically required in the following situations: The total financing amount (including SBA loans, seller financing, or…

  • Litigation Consulting - QuickRead Top Story - Valuation/Appraisal

    Understanding the Income Approach

    April 9, 2025

    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.…

  • QuickRead Top Story - Valuation/Appraisal

    Understanding Net Working Capital

    May 29, 2024

    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,…

  • Estate Planning - QuickRead Top Story - Valuation/Appraisal

    Essential Guide to Gift Tax and Estate Planning

    May 1, 2024

    Consider the SLAT and GRAT in Gift Planning Understanding gift tax regulations is crucial for individuals and their advisors because it impacts estate planning strategies and can significantly affect the overall tax liability. Properly utilizing exemptions and understanding the rules surrounding gift taxation can help individuals minimize their tax burden and ensure a smooth transfer of assets to their intended beneficiaries. This article discusses the availability of the SLAT and GRAT gifting techniques. Understanding gift tax regulations is crucial for individuals and their advisors because it impacts estate planning strategies and can significantly affect the overall tax liability. Properly utilizing…

  • QuickRead Top Story - Valuation/Appraisal

    Determining the Fair Market Value for a NFT

    May 1, 2024

    A Practice Guide for Practitioners What are the proper questions and approaches that enable valuation professionals to value non-fungible tokens (NFTs)? The author describes the questions and methods used to value NFTs. With the recent IRS proposal, the focus on fair market value is repeated as the preferred method for cryptocurrency transactions that do not involve cash.[1] The IRS redefines fair market value to simply market value for cryptocurrencies traded on an exchange; this limits the applicability to less than 10% of cryptocurrencies and highlights the need for practitioners to understand how to apply fair market value calculations to cryptocurrency.…

  • QuickRead Top Story - Valuation/Appraisal

    Economic Obsolescence Measurement Best Practices

    May 10, 2023

    (Part I of IV) Valuation analysts (“analysts”) are often asked to value special-purpose industrial and commercial property. These analyses may be developed for various purposes, including taxation purposes. This discussion focuses on the identification and measurement of economic obsolescence in the application of the cost approach to value such special-purpose property. This topic is particularly relevant to the unit principle appraisal of integrated and complex properties operating on a going-concern basis. Analysts and tax assessors often apply the unit principle of appraisal to value such complex industrial and commercial properties for state and local ad valorem tax appeal and litigation…

  • QuickRead Top Story - Valuation/Appraisal

    What Changes to the Lease Accounting Standards Means

    June 22, 2022

    For Business Valuations Accounting Standards Codification (ASC) Topic 842: Leases is the lease accounting standard published by the Financial Accounting Standards Board, which replaces prior guidance from ASC Topic 840. ASC 842 brings previously off-balance sheet operating leases onto a company’s balance sheet. The new standard takes effect for private companies in fiscal years starting after December 15, 2021, and represents a fundamental change to financial statements, which are the foundation of business valuation analyses. This article will focus on potential impacts to a valuation analysis because of the change in accounting standards. Accounting Standards Codification (ASC) Topic 842: Leases…

  • QuickRead Top Story - Valuation/Appraisal

    Cost Approach to Intellectual Property Valuation

    October 13, 2021

    Part I: Conceptual Principles This is a four-part article series. The articles and discussion focus on the conceptual principles and the practical applications of the cost approach in the development of intellectual property valuations. Part I of this discussion focuses on the conceptual principles that support the application of the cost approach to intellectual property valuation. Part II describes the generally accepted cost approach valuation methods. Part III describes the practical measurement procedures related to intellectual property cost metrics and obsolescence metrics. Part IV presents several illustrative examples of the application of the cost approach in hypothetical intellectual property valuation…

  • Litigation Consulting - Mergers and Acquisitions/Exit Planning - QuickRead Top Story

    Delaware Chancellor Rejects “Apples-to-Oranges” Damages Analysis

    April 21, 2021

    Dieckman v. Regency GP LP et al. This article discusses Dieckman v. Regency GP, LP, a recent Delaware Chancery Court decision. It is a reminder for valuation professionals providing damages testimony to be wary when mixing the use of the market approach and income approach when estimating damages in situations where multiple entities are involved. For example, using the income approach in valuing the allegedly harmed subject company and then using a market approach for a similarly situated company that allegedly harmed the subject company (and vice versa). On February 15, 2021, Chancellor Andre Bouchard of the Delaware Court of…

  • QuickRead Top Story - Valuation/Appraisal

    Paycheck Protection Program

    November 18, 2020

    Valuation Considerations When PPP Has Been Used The Payroll Protection Program (PPP) is a program established in 2020 by the U.S. Congress entitled the Coronavirus Aid, Relief, and Economic Security Act known as the CARES ACT. This Act, which was in response to the President’s closing of the economy on March 13, 2020, was enacted to assist certain businesses, self-employed, sole proprietors, certain nonprofit organizations, and American Tribal businesses in continuing to pay their employees. In this article, the author addresses how a PPP loan should be treated when the entity is the subject of a valuation. A Little History…

  • QuickRead Top Story - Valuation/Appraisal

    The Quick-Reference Guide

    August 26, 2020

    to Business Valuation for Attorneys Investors who hold publicly traded securities have the luxury of knowing the value of their investment at virtually any time. An internet connection and a few clicks of a mouse are all it takes to get an up-to-date stock quote. Of all U.S. companies, however, less than 1 percent are publicly traded, meaning that most companies are privately held. Investors in privately held companies do not have such a readily available value for their ownership interests. How are the values of privately held businesses determined when a couple’s assets are being divided in a divorce,…

  • QuickRead Top Story - Valuation/Appraisal

    Confronting Behavior Bias

    October 30, 2019

    In Financial Projections (Part II of II) This is a two-part article that considers the review and assessment of prospective financial information. Specifically, this discussion describes the behavioral bias that may influence financial projections. This discussion should inform any party involved in compiling or assessing financial projections. This discussion is particularly relevant for fiduciaries who may be involved in the transaction or other investment decision-making process. In Part I of this article, the authors discussed key questions fiduciaries should ask to understand financial projections and eliminate or reduce bias. In this second-part, the authors discuss company-specific considerations—a qualitative approach and…

  • QuickRead Top Story - Valuation/Appraisal

    The Real Estate Paradox

    August 29, 2018

    When Values Collide—Redux Valuing a business that owns real estate presents the business appraiser with a number of conundrums. In this article, the author discusses the concept of a fair investment return and how that may impact the value of the business being sold with the real estate.

  • QuickRead Top Story - Valuation/Appraisal

    The Impact of the Tax Cuts and Jobs Act

    July 11, 2018

    On Business Valuations The Tax Cuts and Jobs Act (TCJA) changes many aspects of how business analysts perform valuations. Upon passing of the TCJA, Jim Hitchner moved quickly to gather and disseminate information about the TCJA and its effect on business valuation. He has written two comprehensive articles in Issues 72 and 73 of Financial Valuation and Litigation Expert. The information in this article summarizes some of the main points expressed in those publications.

  • QuickRead Featured - Valuation/Appraisal

    What the Courts are Saying

    July 12, 2017

    About the Use of Monte Carlo Simulation A number of our colleagues have released updated valuation and damages guidebooks. Despite these newer versions, none of these guidebooks discuss the use of statistics, modeling of time series, ARIMA, or Monte Carlo simulation. In this article, the author describes how the use of Monte Carlo simulation is gaining acceptance.

  • Intellectual Property - QuickRead Featured - QuickRead Top Story

    Creating the Bridge Between Transfer Pricing and the Valuation of Intangibles

    May 11, 2016

    Mergers and acquisitions (M&A) have continued growing since 2008’s financial crisis.  Through the first three months of 2016, the value of worldwide M&A totaled nearly $750 billion.  Cross-border M&A activity totaled $308 billion—accounting for a quarterly record-high 41% share of global M&A value.  As in previous years, M&A in industries with hefty intangible assets—such as pharmaceuticals and technology, media and telecom—dominated deal making.[1]