Business Valuations

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...

This month's issue of Valuation & Litigation Advisory Insights includes the following articles:

• Intangible Assets – If I cannot See Them, What Are They?
• What is the value of intellectual property
• The perfect exit strategy: Don’t leave it to chance

Intangible Assets – If I Cannot See Them, What Are They?

“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...

“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...

Being a firm in the Midwest, we commonly value heavy manufacturing and industrial-based companies.  While we service a wide array of industries in the valuation space, we have noted a growing trend in the region for start-up information technology companies.  Therefore, we are often charged with the task of determining values for these fast-paced companies.

We recently completed the valuation of one such high-growth IT company.  We were engaged to determine the value of equity of the subject...

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:

1. Changes in the Company, Economy and Industry
2. Standard of Value
3. Level of Value

Wondering if your valuation report can be reused? Post a comment below or contact our Valuation & Litigation Advisory Services Group at 440...

This month's issue of Valuation & Litigation Advisory Insights includes the following articles:

• Smooth Sailing How to Make Sure Your Business Valuation Engagement Runs Smoothly
• Valuing a Business With Significant Real Estate Assets
• Marketability Discounts for Controlling Interests?

Smooth Sailing: How to Make Sure Your Business Valuation Engagement Runs Smoothly

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...

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...

In the wake of MF Global Holdings LTD’s bankruptcy, clients, regulators, and creditors are all attempting to untangle the defunct investment company’s financial accounts to determine what remains to be distributed to MF Global’s stakeholders.  The billions of dollars lost by MF Global on its investments in European sovereign debt left its clients scrambling to salvage any part of MF Global’s assets to recoup their diminished account balances.  But what about the other secured and...

This month's issue of Valuation & Litigation Advisory Insights includes the following articles:

• Management Involvement in Purchase Price Allocations
• How Do You Value a Startup Company
• Business Contingencies – What Are They and Why Should You Care?

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 that even...

“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...

This month's issue of Valuation & Litigation Advisory Insights includes the following articles:

• Why the Valuation Date is so Important
• How Calculation Engagements Can Provide an Indication of Value
• Chemtura Addresses Business Appraisals in a Volatile Economy

Why the valuation date is so important

When one considers how the value of an asset will be determined in a matter, it’s common to think about what method the appraiser will use or whether discounts may apply. But a critical factor that may not...

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...

Adversarial.  Hostile.  Inequitable.  These are words commonly associated with traditional divorce proceedings.  Typically, these proceedings include pre-trial negotiations and settlement procedures which are transacted under the shadow of the court, subject to the authority of the judge, who has the power to reject or amend settlements in cases where they may appear inequitable in the eyes of the court.  The pre-trial process is typically adversarial in nature and business valuation experts are...

This month's issue of Valuation & Litigation Advisory Insights includes the following articles:

• Just Awards – Construct a Framework When Assessing Damages
• Defense Damages Experts: Developing a Winning Strategy
• Reasonable Royalty Calculations Demand Sound Expert Analysis

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...

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
• ACFE survey provides insights on fraud prevention and detection
• What is the "value" of litigation

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:...