Business Valuation Best Practices: you don't have to use every method, but you can't simply ignore them, either


If there was the major theme at some of the major BV meetings recently—Boston (ASA), San Diego (USD Tax Conference), and Chicago (NACVA CTI meetings and BVR Divorce Summit), it was this:  BV best practices now require not ignoring a tool that’s available to support your argument.   You don’t have to use them all...but you can’t just ignore them.

This theme surfaced in all the major discussions.  In San Diego, the issue was DLOM, but the conclusion was the same; you may not use Mandalbaum, QMDM, FMV, Valuation Advisors, or other methods—but you’re in better shape if you explain why your judgment led you to not use the ones you skipped.   In Boston, the discussion was about total beta and company specific risk—you might use a checklist, or Butler Pinkerton Calculator, or D&P, or SBBI, but if you ignore the other cost of capital sources, you better explain why.

All of these tools have strengths and weaknesses.  So, appraisers can easily chose NOT to use one or more of them.   Just explain why you made that decision in your reports, or some one from the opposing side may end up confronting you later.


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