Viewpoint on Value

Showing 337–352 of 378 results

  • Creating a reliable buy-sell agreement — A valuation provision must be at its heart

    January / February 2010
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 1074

    Abstract: A buy-sell agreement can be an important tool in smoothing any business ownership transition — whether the aim is to maintain control, provide liquidity and a ready market for the stock, retain key employees, or ensure an orderly ownership transfer in the case of death, disability or divorce. And at the heart of every successful buy-sell agreement is a well-reasoned, supportable value. This article explains the various approaches a valuator might use to set the price in a buy-sell agreement and ensure the resulting valuation is objective and fair to all shareholders.

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  • Think outside the box in divorce

    January / February 2010
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 651

    Abstract: The rules governing equitable marital dissolutions vary from state to state. But divorce courts often consider cases in other jurisdictions, especially when relevant legal precedent in their own jurisdictions is lacking. This article uses a recent tax case, Wechsler v. Wechsler, to illustrate the importance of considering Tax Court precedent if a marital estate includes a holding corporation with significant built-in capital gains tax obligations. Citations: Wechsler v. Wechsler, 2008 WL 4635832, Oct. 21, 2008; Estate of Dunn v. Commissioner, 301 F.3d. 339, 5th Cir., 2002; Estate of Jelke v. Commissioner, U.S. Court of Appeals for the 11th Circuit, No. 05 15549, Nov. 15, 2007.

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  • Look for the silver lining — A volatile market translates into higher marketability discounts

    January / February 2010
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 1112

    Abstract: Recent market volatility may provide an opportunity to gift private business interests at significant discounts, potentially saving a substantial amount in taxes. High volatility typically lowers marketability by making investments less attractive. This article discusses the data valuators generally use to support marketability discounts for private companies, including restricted stock and pre-initial public offering studies. It also looks at other factors that affect marketability, such as the pool of potential buyers, company size and financial performance.

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  • SBA tightens business acquisition lending requirements

    November / December 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 516

    Abstract: This brief article summarizes a recent SBA move to rein in lenient lending practices to small businesses: SBA Standard Operating Procedure (SOP) 50 10 5(A). The new requirement calls on business acquisition loan applicants to submit an independent business appraisal for all loans greater than $250,000 (excluding the appraised value of real estate and equipment). The article explains that the SBA defines a “qualified source” for the independent appraisal as someone who regularly receives compensation for business valuation. It also notes the controversy resulting from restrictions the SBA has placed on loans based on a company’s goodwill.

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  • One price doesn’t fit all — Making sense of valuation discounts

    November / December 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 847

    Abstract: Valuation is based on the specific facts and circumstances of a situation. If the controlling interest and all the minority interests are valued separately, they may add up to more or less than what could be received if the company were sold as a whole. This article discusses the types of valuation discounts that may affect value, including minority interest and lack of marketability discounts. It explains the importance of the degree of control represented by a block of stock and uses a hypothetical case study to illustrate the way discounts actually work in the real world. The article points out that a qualified appraiser can find well-supported discounts that will withstand IRS scrutiny.

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  • Knowing value is half the battle

    November / December 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 721

    Abstract: While baby boomers nationwide are considering selling their businesses in preparation for retirement, a majority of them haven’t had their businesses appraised by a valuation professional within the last year. This article looks at a business’s value drivers — and value drainers — listing several key factors investors look for when valuing a business interest, including profits and cash flow, competent asset management and reinvestment in research and development. The article explains that an objective valuator can help business owners find ways to minimize risks and maximize selling price when it’s time to retire.

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  • Built-in capital gains tax can be a real drag

    November / December 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 851

    Abstract: Capital gains tax obligations can significantly affect value, especially for an established holding company with low cost basis. Even if a sale isn’t imminent, investors consider tax obligations when buying and selling business interests. This article notes that courts increasingly embrace valuation discounts for built-in capital gains tax, using a case study to illustrate the point that it’s not so much whether capital gains tax affects value but how to quantify the discount. Because the IRS and the Tax Court haven’t agreed on the proper method for quantifying the discount, it’s even more important that the discount be well supported by facts and legal precedent.

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  • Finding the appropriate valuation standard

    September / October 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 916

    Abstract: Valuation isn’t static and can change depending on the purpose of the valuation. This article looks at the three most common standards of value: fair market, investment and fair. It briefly defines each standard and discusses the circumstances in which one standard may be more appropriate than another. The article points out that identifying the appropriate valuation standard up front can minimize confusion down the road. The goal is to arrive at a reasonable and supportable value conclusion in light of all the surrounding facts and circumstances.

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  • Shortcuts can be embarrassing — and costly

    September / October 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 561

    Abstract: This brief article warns that novice valuators who sidestep valuation procedures to save money — as well as clients who misrepresent the facts to skew valuation results — may be in for a rude awakening. Courts are becoming increasingly sophisticated in appraisal matters. When a valuator skips steps or fails to understand a company’s operations, the court is likely to discount — or even reject — the expert’s opinion. The article uses the recent case Burr v. Burr to illustrate this point. Case citation: Burr v. Burr (2008 WL 4906271, Mass. App. Nov. 18, 2008).

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  • Avoid M&A pitfalls with targeted due diligence

    September / October 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 765

    Abstract: Anyone buying, selling or merging with a business needs to “kick the tires” before signing on the dotted line. This article explains that a financial professional can conduct due diligence procedures that target high-risk areas for any industry. The article lists seller — and buyer — M&A concerns. It also notes that do-it-yourself M&As can lead to disastrous outcomes and unexpected surprises, pointing out that engaging financial and legal professionals early in the process can save money and stress over the long run.

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  • How valuators assess the rising risk of fraud

    September / October 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 758

    Abstract: The current economic downturn has produced an upswing in incidents of occupational fraud, so it’s imperative for businesses to step up efforts to deter and detect it. An important part of the valuation process is identifying potential risks and gauging whether management has taken appropriate action to mitigate those risks. This article explains how valuators evaluate internal controls and corporate culture, tailoring their analyses of fraud risks based on the subject company’s size, complexity, industry and goals. The article has an accompanying pie graph chart that shows business fraud scheme type and prevalence over the past few years.

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  • What’s the valuation Rx for unhealthy companies?

    July / August 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 435

    Abstract: The recession has taken its toll on many companies. Factors driving companies to the brink of bankruptcy include weak demand, scaled-back corporate budgets and rising commodity prices. This brief article discusses the warning signs of trouble, including late or missing financial records; deferred maintenance, repair and equipment updates; and sales of fixed assets to generate cash. It then points out how valuators can work with management to help distressed companies accurately project value in light of turnaround plans as well as determine liquidation value if needed.

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  • Identify a qualified appraiser with these questions

    July / August 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 782

    Abstract: This article offers advice to help attorneys identify qualified valuation experts and facilitate questioning in deposition and at trial. It lists several points that can help determine whether an appraiser is qualified, including years of experience, percentage of time spent valuing businesses and professional business valuation credentials. The article suggests that obtaining clarification up front can help attorneys get the most from a valuator’s expertise and avoid costly mistakes.

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  • For what it’s worth — The issue of owners’ compensation

    July / August 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 1027

    Abstract: One of the biggest expenses for private businesses is owners’ compensation. Value often is based on comparisons between a subject company and guideline companies. If owners are overcompensated compared with similar businesses, the subject company will be undervalued on a controlling basis — and vice versa — unless the valuator adjusts the company’s income stream. This article discusses the issues involved with owners’ compensation, including executive compensation in divorce cases, tax issues, the company’s industry and the general economy.

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  • Electronic discovery: Federal Rules meet the 21st century

    July / August 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 1087

    Abstract: Most businesses create and retain information in some type of electronic format, which may include e-mails, spreadsheets, voice mails and accounting records. And all of this electronically stored information (ESI) could be relevant in a lawsuit. The federal judiciary’s Civil Rules Advisory Committee recently amended the Federal Rules of Civil Procedure (FRCP). The new rules, which took effect in December 2006 and govern ESI, provide litigants with a cost-effective, timely way to share data. This article looks at how valuation experts can help attorneys address such issues as potential sources of electronic data, control concerns, preferred formats for electronic documents, and ESI preservation and authentication. A sidebar outlines an 11-point checklist for authenticating electronic records.

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  • Joint appraisal: The power of one

    May / June 2009
    Newsletter: Viewpoint on Value

    Price: $225.00, Subscriber Price: $157.50

    Word count: 454

    Abstract: This brief article points out that a joint appraisal can be useful in some situations, including divorce, by facilitating information sharing to streamline the valuation process and minimize divergent opinions. In fact, some jurisdictions mandate the use of a joint appraiser when the marital estate includes a privately held business interest. The article notes the potential pitfalls, but suggests that using a joint appraiser can often save both money and time.

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