Particular challenges can arise in goodwill impairment valuation and accounting when a company acquires a business located in another country.   When goodwill accounting standards are strictly applied, under U.S. GAAP or IFRS, the differences between write-offs taken in one country versus another should be minimal. This article delves into some of the notable differences in goodwill impairment conclusions w ...

Five years ago, no one really knew what big data was and now, it seems it’s all anyone can talk about. Big data is the term used for information retailers, government agencies, and other organizations collect from the public that other entities might have a vested interest in purchasing because they produce ancillary products or services that could be marketed to the same individuals. While there has been m ...

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-à-vis private equity and venture capital, and outlines the opportunities and challenges for valuation analysts interested in serving this market sector. ...

Recognizing Hindsight and Projection Bias How can one expert opine that the company is insolvent and another expert—viewing the same financial statement—opine that the company is solvent? In this article, Michael Vitti answers this question and provides an overview of what is considered a preference and a fraudulent transfer. ...

Private companies are subject to several frameworks for financial reporting purposes. In this article, Mark Zyla explains the role of the Private Company Council (PCC) and provides a summary of several recommendations the PCC has made to the FASB regarding accounting for goodwill and business combinations. ...

Valuation of the Customer Base The value of the customer base is a function of attribution. Measuring percentage attribution requires access to internal data, and this data is often missing. Where it is available, the valuation professional can use the Constant Revenue or Revenue Decline Model. This article explains how these models are developed. ...

  In the early days of the scandal surrounding LA Clippers owner, Donald Sterling, certain terms of his punishment by the NBA were a given. What no one was sure of was whether or not he would be forced to sell the team. As speculation turned into fact, it seemed as if valuation estimates for the team were coming out of the woodwork. Some said the team price tag could go as high as $1 billion. Earlier i ...

  In spite of the current economic climate, a recent survey from the American Institute of CPAs (AICPA) showed that 54 percent of valuation professionals expected a 10 to 50 percent increase in the demand for their services over the next two to five years. These results are part of the 2014 AICPA Survey on International Trends in Forensic and Valuation Services. Forensic experts were even more optimist ...

Know your data! Understanding the data that is applied in an analysis is important. Data that relies on standard industrial classification (SIC) codes can be misleading for industries that have changed—or did not exist—in 1987. As business models and industries evolve, it pays, as Bob Bridges explains in this article, to do a closer analysis. ...

The valuation of customer relationships can be somewhat of a gray area for valuators. In many cases, the common valuation methodologies don’t apply, and the professional neglects to consider whether the determined value is consistent with a market participant’s perspective. While it’s become routine to assume customer relationships are a primary asset, this is not the case across all industries. In a short, ...

Calculation engagements require development standards A proper calculation engagement requires planning, mutually agreed upon procedures, and adherence to professional standards. Otherwise, the valuation analyst and firm risk damaging their good name and reputation. ...

CPAs can increase billings by catering to exiting baby boomer business owners. Baby boomer businesses may represent a material percentage of a CPA firm’s clientele. As a record number of these business owners begin the succession/exit process, hidden opportunities exist for firms to increase billing, if you know how to spot them. ...

Use of photography in forensic and valuation engagements The purpose of this article is to provide the CPA/expert a brief introduction to the use of photography in a valuation or forensic engagement. It is not intended to be an all-inclusive training manual in forensic photography. Criminal forensic photographic procedures may, due to the differences between civil and criminal law, be materially different. ...

Suggestions for business valuation professionals thinking about retiring This article contains some tips from a long-time practitioner to business valuators who are reaching retirement age, but are not ready to retire and just play golf. ...

The average major league baseball (MLB) team today is worth $811 million, up 9 percent from last year. That’s not too bad for being in the middle of the pack. To make it to the top, however, a lucrative deal and strong regional network are essential. For the first time, five teams combine the right ingredients to make it over the $1 billion mark. The increase in value for the teams was more than double the ...

Can private companies really increase their value 80-100 percent by limiting unsystematic (controllable) risks? The November/December 2013 issue of The Value Examiner featured Ken Sanginario’s article entitled, “The Valuation Business: A Strategic Road Map for Success.” In this article, Sanginario answers questions raised by skeptics to make the case that value doubling for private companies is possible. ...

The digital age represents both forensic challenge and opportunity Forensic financial analysts can increase their effectiveness and value by expanding their training and knowledge in IT forensics. ...

Maximizing value by minimizing risk Most private company owners are not aware of the impact of company-specific risk on the value of their businesses. When they are faced with a need to increase the value of their businesses in order to close a value gap, they typically only focus on growing sales, reducing costs, or making an acquisition. None of those strategies are the most effective initial way to incre ...

The days of applying Mandelbaum and referencing a few IPO and restricted stock studies are over. This article addresses what is often omitted from most asset holding entity valuation reports. By failing to include issues like the ones outlined, the resulting adjustments are less empirical and more a "guesstimate". Valuation practitioners and their advisory clients have a duty to the users of our reports to ...

Four things valuators should know about medical claims and coding While all valuators need to be able to cite specific factors considered in the determination of fair market value, many times the measures selected could be applied to a variety of industries. In this first of a two-part series, Jeffry Moffatt examines why revenue is most often a primary area of interest for valuation, because without revenue ...