(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 ...

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, 2 ...

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 ge ...

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 allege ...

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 nonprof ...

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 he ...

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 ma ...

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. ...

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 summ ...

or a Ball and Chain In this article, the author discusses his views on how to value a funeral home. ...

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. ...

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 pharmaceutic ...

on Business Valuations in Litigation In this article, Paul Fullerman, CPA, CVA, discusses techniques which can assist the accredited valuation professionals performing a business valuation. ...

An In-Depth Series on Healthcare Valuation, Part 2 of 4 This article focuses on utilizing an income approach to value outpatient enterprises, while subsequent articles in this topic series will address the use of a market approach and an asset/cost approach to value outpatient enterprises. ...

Part I: Three of the 12 Reasons a Valuation Is Needed in Chapter 7, 9, and 11 This two-part article summarizes the various types of intellectual property that valuation analysts (“analysts”) may encounter within a commercial bankruptcy controversy, lists the generally accepted intellectual property valuation approaches, and presents the reasons why analysts may be asked to value intellectual property within ...

A Primer on the Approaches and Issues Involved in Valuing Trademarks Valuation analysts are often called on to perform valuation, damages, and transfer price analyses of trademark-related intangible property for various purposes. This discussion describes the valuation of trademarks within the context of both financial accounting and income tax accounting (in particular, tax-related intercompany transfer pr ...

Issues and Opportunities This article discusses some of the issues in using the Pratt’s Stats transaction data, which can be used to develop multiples in a Market Approach or to develop a private market discount rate used in an Income Approach. The information presented is relevant to both business brokers/intermediaries and business appraisers. ...

The impact on shareholder value Knowing the value of a business and delivering real value to a client company entails far more than using EBITDA multiples or going along with a rule of thumb to keep the peace. As professionals, valuators must be far more rigorous in their engagements, and focus on delivering value. The obligation to identify, measure, manage, and mitigate the risks are their responsibility. ...

When the usual approaches won’t work Technology and innovation expert and professor, Tim Swift, proposes an alternative to the traditional Market, Income, and Cost approaches to valuing a patent portfolio. ...

Understanding the nature and risk of expected cash flow This discussion summarizes the interrelatedness of the weighted average cost of capital and the weighted average return on assets within the context of a purchase price allocation for financial reporting purposes. Failure to understand this fundamental relationship can lead to inaccurate estimates of value for the acquired assets and, therefore, inaccu ...