Viewpoint on Value
Showing 225–240 of 382 results
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The cost approach: An integral piece of the valuation puzzle
July / August 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 444
Abstract: Numerous articles have been written about the nuances of the income and market approaches. But the cost approach can also be a viable valuation technique. The concept underlying the cost (or asset-based) approach is that the value of a business equals the difference between the values of its assets and liabilities. This article offers a closer look at how it works. Richard Scott Starling v. Teresa Ann Morehead Starling (Va. Ct. of Appeals, Record No. 0589-13-3, Sept. 10, 2013)
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Are shareholder advances bona fide debt or equity?
July / August 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 637
Abstract: Closely held business owners sometimes need to advance their companies money to bridge a temporary downturn or provide extra cash flow for other purposes. How should valuators categorize those advances — as bona fide debt, additional paid-in capital or somewhere in between? The answer depends on the facts and circumstances of each assignment. This article explains how advances affect value and how to classify them.
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Choosing between lost profits and lost value
July / August 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 652
Abstract: How do valuators quantify losses when breach of contract, patent infringement or other illegal acts damage a business? Three options exist: Calculate lost profits over a finite period, compute the decrease in business value or use a combination of both. What’s appropriate depends on various factors, including relevant laws and the nature of the alleged wrongdoing. This article examines the specifics.
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Holding companies with built-in capital gains – Tax Court case addresses key valuation issues
July / August 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 902
Abstract: The Tax Court recently addressed a case in which the IRS and taxpayer started out more than $6.1 million apart. But this article explains how the court slowly worked through the major sticking points — including how to select the appropriate valuation methodology and how to handle the company’s built-in capital gains tax liability — to arrive at a value substantially higher than was originally indicated on the estate tax return. A sidebar discusses how hiring a “qualified appraiser” to perform a “qualified appraisal” can help taxpayers prove that they qualify for the IRS’s exception to its valuation misstatement penalties. Estate of Helen P. Richmond (T.C. Memo. 2014-26)
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How excess earnings fits into an appraiser’s toolkit
May / June 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 437
Abstract: Critics of the excess earnings method call it subjective, ambiguous and outdated. Yet the method remains a viable tool, especially when valuing small professional practices for divorce purposes. Because of its perceived simplicity, the excess earnings method can also serve as a meaningful sanity check for other methods. This article explains how it works.
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5 steps to valuing a business
May / June 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 621
Abstract: Valuators use a variety of analytical techniques and possess different qualifications. But a common denominator is the process that everyone uses to value a business. This article describes the five steps a valuator undergoes: 1) agreeing on engagement parameters, 2) requesting documents, 3) undertaking fieldwork, 4) preparing the report, and 5) providing expert testimony.
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Key people: Hard acts to follow, hard risks to measure
May / June 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 627
Abstract: The loss of a “key person” from a business could disrupt day-to-day operations, alarm customers, lenders and suppliers, and drain working capital reserves. But how do valuators quantify the value of key people? This article looks at the factors they consider when evaluating a key person discount and how they judge the ability of others to take over a key person’s responsibilities and relationships. It also discusses the three valuation methods they generally choose from.
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Facts and figures you need before closing – Valuators minimize stress on both sides of the deal
May / June 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 878
Abstract: An appraisal can be useful when buying or selling a business, for both sides of the deal may have unrealistic expectations. This article describes how a valuation professional brings some objectivity and concrete transaction data to the negotiating table. It explains how valuators can help both buyers and sellers put a price tag on synergies and how they allocate the purchase price for book and tax purposes. A sidebar explains why buyers generally prefer an asset sale and sellers a stock sale.
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A little bit of growth is a big deal
March / April 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 413
Abstract: When valuators use the income approach, long-term sustainable growth is an important assumption. That’s because a small difference in the projected growth rate can have a big impact on business value. This brief article uses an example to look at why long-term sustainable growth rates matter, and notes that, whenever a valuator makes assumptions about expected growth, it’s important to ask whether the assumptions make sense compared with other economic indicators.
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The early bird wins the case – Get appraisers involved in litigation sooner rather than later
March / April 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 595
Abstract: Appraisers can be invaluable and essential expert witnesses, but they can help a case even more if engaged from the beginning — as soon as deposition questioning starts. This article offers some advice on how to ensure attorneys and others get the most out of their valuation experts. The article explains the importance of business valuation credentials, valuation experience and familiarity with the industry. It goes on to list some of the most pertinent questions to ask a potential valuation expert witness — or the opposing expert — to determine whether any weaknesses might exist. Areas to address include knowledge of valuation basics and the steps in the valuation process.
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Taking a closer look at financial statement adjustments
March / April 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 677
Abstract: Often, an appraiser needs to make adjustments to get a clearer picture of an investment’s future economic benefits and to determine an objective value for the subject interest. This article uses a hypothetical divorce case to illustrate the fact that taking financial statements at face value can be misleading and inaccurate. The article points out that an appraiser may need to make adjustments to the financial statements to account for a particular business’s situation and circumstances, including the business interest size and the valuation purpose.
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Strategic investments – How valuators facilitate decision making
March / April 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 866
Abstract: Some private business owners make major decisions by relying on gut instinct, rather than financial metrics. But investments made on a “hunch” often fall short of management’s expectations. This article describes several forms of financial analysis that valuators may conduct to systematically probe companies’ finances and introduce objectivity to the decision-making process. This can help management rein in unrealistic projections and make optimal choices in today’s volatile marketplace.
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Expect more from rebuttal experts
January / February 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 415
Abstract: An attorney might use a rebuttal report to critique another expert’s report or identify discrepancies between two experts’ opinions. A rebuttal report can save time and money compared with obtaining another formal appraisal, but to be effective it must be substantive and accurate. This brief article explains what rebuttal reports typically contain and how they can aid attorneys during the litigation process. B-K Cypress Log Homes v. Auto-Owners Insurance Co., 2012 U.S. District 73773, May 25, 2012
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The give and take of earnouts
January / February 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 645
Abstract: In a business acquisition, the buyer and seller may have difficulty reaching agreement on the business’s value. To avoid a tug of war, both parties may benefit from an earnout provision requiring the buyer to make future payments to the seller. This article points out the components of a typical earnout provision, including a quantitative formula to determine how much is to be paid if the business reaches a specific financial target, and when, and how many, payments are to be made. The article concludes that an earnout provision can bridge the valuation gap and ensure the deal will be beneficial for both parties.
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Divvying up assets in divorce – In-kind distributions of stock may warrant valuation discounts
January / February 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 581
Abstract: Divorce courts typically refrain from subtracting discounts for lack of control and marketability when divvying up marital estates that include private businesses. Instead, a spouse is generally entitled to the cash equivalent value of a pro rata share of the entire business. This article, however, discusses a recent noteworthy exception made by the Supreme Court of Rhode Island in McCulloch v. McCulloch. This article elaborates on the ins and outs of the case, noting the importance of considering the rights and liquidity each spouse receives with his or her retained assets. McCulloch v. McCulloch, 2013 R.I. LEXIS 113, June 25, 2013.
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Coming to terms with the cost of capital
January / February 2014
Newsletter: Viewpoint on Value
Price: $225.00, Subscriber Price: $157.50
Word count: 921
Abstract: Small differences in the cost of capital between opposing experts can have a disproportionately big effect on business value. But the cost of capital can be one of the most difficult ingredients of business valuation for judges, jurors, attorneys and business owners to understand. This article provides a framework for understanding how the cost of capital functions in business valuation. The article explains when appraisers use the cost of capital and how they ascertain which type is appropriate in a particular situation.