I
wasn’t a quarterback, but my assumption is that making a throw to a
stationary receiver isn’t terribly difficult. Making a throw
to a receiver sprinting across the field while being chased around
by 300 pound monsters is another story. Hitting a moving
target, whether it’s throwing a pass to a running receiver or
trying to meet a budget that is continually changing, is a
difficult feat. This is no different than the ever-changing
estate and gift tax landscape that business owners and...
“All arguments concerning existence are founded on the
relation of cause and effect.” - David Hume
In the quote above, David Hume, a famous philosopher, says that
the basis of existence is founded in cause and effect. Cause
and effect is simple to picture for tangible objects – if I cause
my finger to type a letter on the keyboard, that letter shows up on
my computer screen. It becomes a little more difficult to
picture cause and effect with intangible things – if I greet a
stranger on the...
Reduce, re-use and recycle is a tried and true concept when it
comes to going green. Does it also apply to business valuation
reports? It depends. This video blog looks at the three major areas
that must be considered before relying on the value indicated by an
old business valuation:
We
have all had to tackle tasks that just seem to grind and clunk
along without much direction or urgency, which can be frustrating
for all of the parties involved. The same can be true for
business valuations – some engagements may stretch on for months or
years for various reasons. In order to avoid these headaches
(and the potentially increased fees as a result of the valuation
expert having to pick up and put down the project multiple times),
the party engaging the valuation expert and those...
This month's issue of Valuation & Litigation Advisory
Insights includes the following articles:
Growth rate becomes critical to lost profits calculation
In the battle of experts, one weapon simply isn't enouth
Tax Court to valuators: Explain yourself!
Growth rate becomes critical to lost profits
calculation
In commercial cases involving lost profits,
selecting an appropriate growth rate is a critical step in
calculating damages. It’s also one of the most challenging.
Depending on the amount at stake...
I
think we’ve all heard the saying, “There’s no such thing as
something for nothing.” I think it is possible to take that a
step further and say, “There’s no such thing as a lot for
almost nothing.” With the current economic downturn,
consumers have become far more judicious with their purchases and
are doing all they can to squeeze as much out of every dollar spent
as possible. Me personally, I’m still using a flip-phone
without internet, I pretty much only get new clothes on my birthday
or...
Management Involvement in Purchase Price
Allocations
It is common for companies to bring in a third-party valuation
expert to value the intangible assets acquired in a business
combination for financial reporting purposes. It is important
to note...
“Go
Green!” There is a big push in our office to work in an
environmentally-friendly manner – from turning out the lights after
leaving an area, to recycling pop cans, to our Real Estate and
Construction niche group members obtaining Green Advantage
Commercial/Residential (GACR) certifications. Regardless of
whether global warming is a real or make-believe phenomenon, the
concept of making more efficient use of the resources that we
currently have will only continue to grow as the world’s...
It is
common for companies to bring in a third-party valuation expert to
value the intangible assets acquired in a business combination for
financial reporting purposes. It is important to note that
even when a third-party valuation analyst is involved, a
considerable amount of time will need to be devoted by management
in order to complete the valuation analysis.
The
valuation of intangible assets is not a “hands-off” process for a
company’s management. Actually, purchase price...
Just awards: Construct a framework when assessing
damages
Almost daily, jurors award huge damages to
plaintiffs. But are these jurors making informed decisions? One of
the most important contributions a financial expert can make...
As
a result of numerous requests from privately-held companies, the
Financial Accounting Standards Board (FASB) recently issued a
proposed update related to goodwill impairment testing.
According to the current goodwill impairment testing rules,
management must first determine whether the fair value of their
company/reporting unit is greater than its book value. The
valuation analysis that must be prepared to support the fair value
determination (and pass auditor scrutiny) is sometimes...
On Friday evening, the S&P downgraded the United States’
sovereign debt rating to AA+ for the first time in our
history. While we all saw yesterday what a huge impact this
downgrade could have on our stock portfolios, there is also a
considerable effect on the process by which we as valuation
practitioners value closely-held companies. For years,
valuators have based their analyses of cost of capital on the
assumption that the U.S. debt is “risk-free.” For example,
our firm typically uses the...
Did
you hear that? That loud sigh of relief? That was me
exhaling now that it is official that football will be on my TV
screen during Sunday afternoons this fall. Now that teams are
wrapping up the mad scramble to add free agents and resign players,
the football world’s collective thoughts naturally turn to which
team is the favorite to win the NFL championship. At the
beginning of the year, there are always a number of teams that the
pundits believe have a good shot at making a title run. As...
3 ways to communicate with a valuation professional
Nothing's more frustrating than sitting down for a consultation
with a valuation professional and failing to fully understand the
process and how an appraiser arrives at a certain value. To...
The
concept of sharing is ingrained in us at an early age. In
preschool, I can still remember being told to share the classroom
toys with my classmates. In the business world, however, the
concept of sharing is sometimes cast aside by business owners and
investors. In particular, when distributions are not shared
equally (pro-rata) by investors, it can have an impact on the value
of those ownership interests.
Oftentimes, when businesses make distributions of
cash and other assets to their...
Nearly 90% of owners of family-run businesses believe that the
same family (or families) will control the business in five
years. Unfortunately, if history provides any indication,
only about two-thirds of those businesses will survive to the
second generation. The statistics deteriorate when it comes
to the third and fourth generations, with only 5% of family-owned
businesses surviving to the fourth generation. These
statistics illustrate a key challenge that today’s business owner
faces:...
I feel
terrible for those in the South who are struggling with some of the
worst flooding that the U.S. has experienced in years. One
pair of shoes I’m glad I’m not in belong to the person who had to
decide whether or not to open up the Morganza Spillway. Open
up the spillway – save New Orleans, but flood a rural area in which
over 25,000 people live. Keep the spillway closed – keep the
Mississippi River contained north of New Orleans, but risk another
major flood in the city that birthed jazz...
I
wasn’t a quarterback, but my assumption is that making a throw to a
stationary receiver isn’t terribly difficult. Making a throw
to a receiver sprinting across the field while being chased around
by 300 pound monsters is another story. Hitting a moving
target, whether it’s throwing a pass to a running receiver or
trying to meet a budget that is continually changing, is a
difficult feat. This is no different than the ever-changing
estate and gift tax landscape that business owners and...
We
have all had to tackle tasks that just seem to grind and clunk
along without much direction or urgency, which can be frustrating
for all of the parties involved. The same can be true for
business valuations – some engagements may stretch on for months or
years for various reasons. In order to avoid these headaches
(and the potentially increased fees as a result of the valuation
expert having to pick up and put down the project multiple times),
the party engaging the valuation expert and those...
I
think we’ve all heard the saying, “There’s no such thing as
something for nothing.” I think it is possible to take that a
step further and say, “There’s no such thing as a lot for
almost nothing.” With the current economic downturn,
consumers have become far more judicious with their purchases and
are doing all they can to squeeze as much out of every dollar spent
as possible. Me personally, I’m still using a flip-phone
without internet, I pretty much only get new clothes on my birthday
or...
“Go
Green!” There is a big push in our office to work in an
environmentally-friendly manner – from turning out the lights after
leaving an area, to recycling pop cans, to our Real Estate and
Construction niche group members obtaining Green Advantage
Commercial/Residential (GACR) certifications. Regardless of
whether global warming is a real or make-believe phenomenon, the
concept of making more efficient use of the resources that we
currently have will only continue to grow as the world’s...
The
valuation of intangible assets is not a “hands-off” process for a
company’s management. Actually, purchase price...
As
a result of numerous requests from privately-held companies, the
Financial Accounting Standards Board (FASB) recently issued a
proposed update related to goodwill impairment testing.
According to the current goodwill impairment testing rules,
management must first determine whether the fair value of their
company/reporting unit is greater than its book value. The
valuation analysis that must be prepared to support the fair value
determination (and pass auditor scrutiny) is sometimes...
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