Business Valuation Update Yearbook, 2019 Edition
February 2019 PDF
BVR (editor)
Business Valuation Resources, LLC
In the business valuation profession, ideas and methods continually evolve, making it imperative to stay current with the most innovative approaches and techniques, new court decisions, and regulatory and professional standards. BVR has you covered with the Business Valuation Update Yearbook 2019. This newest edition from the publishers of Business Valuation Update (BVU) covers the year’s most groundbreaking and thought-provoking advancements on valuation methodologies, changes in regulations and professional standards, leading conferences, and practice-building ideas. This critical desktop reference keeps you ahead of your peers with on-the-ground reporting from valuation experts, thought-leaders, and BVR’s editorial team.
This publication and many more are also available for download with a subscription to the Digital Library or BVResearch Pro.
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The Yearbook is divided into six easy to maneuver sections:
- Section I. Business Valuation Approaches, Methods, and Entity-Specific Issues: This section covers the latest industry news as well as the most discussed and most controversial business valuation topics that arose over the past year. Make sure you're in-the-know on topics such as the debate over the use of statistics in the transaction method, disagreements related to the use of calculation reports in valuation, methods to separate active and passive appreciation, work file checklists for fair value for financial reporting, and much more.
- Section II. Business Valuation Conference Coverage: Get on-the-ground reporting from the premiere business valuation conferences both in the U.S. and around the globe.
- Section III. Legal, Regulatory, Standards: It’s imperative to stay current on the latest news regarding the legal, regulatory, and business valuation standards landscape. This section offers critical insight into how the Tax Cuts and Jobs Act will affect valuations going forward. Key issues include the deduction for “qualified business income” for owners of a pass-through entity as well as the limitation of business interest expense deductions. Also of note is the Department of Labor’s (DOL) crackdown on ESOPs as well as the Public Company Accounting Oversight Board’s new standards to address ongoing audit deficiencies in fair value.
- Section IV. Business Valuation Profession and Practice Management: A number of articles in this section reveal insights into valuation firm performance and practice development. These comprehensive articles offer tips on how to bring in more business valuation work, as well as coverage of cutting-edge techniques to collaborate with the IRS.
- Section V. Reviews of Data Sources and New Books: This section includes an overview of BVR’s launch of the new platform, Cost of Capital Professional and a review of the major upgrade of Pratt’s Stats to DealStats. In addition, we have included reviews of Gary Trugman’s 5th edition of Understanding Business Valuation: A Practical Guide to Valuing Small to Medium Sized Businesses, the new edition of Nancy Fannon and Jonathan Dunitz’s Comprehensive Guide to Economic Damages, 5th edition, and insight into the significant enhancements made to the Mergerstat Review.
- Section VI. Data: This important section is an amalgamation of the monthly cost of capital data presented in tabular and chart form. It also includes aggregated data from DealStats, the valuation profession’s leading data platform for private company transactions.
Table of Contents
Introduction
Section I. Business Valuation Approaches, Methods, and Entity-Specific Issues
- Use and Misuse of Survey Data to Set Physician Compensation Market Multiple Adjustments: Get a Grip on GRP
By James T. Budyak CPA/ABV, CFA, ASA, Valuation Research Corp. (Milwaukee, Wis., USA) - A Response to an Article on S Corp Tax Affecting
By R. James “Jim” Alerding, CPA/ABV, ASA, Alerding Consulting (Indianapolis, Ind., USA) - Dietrich and Smith’s Debate Challenge Re: FMV of Physician Pay
- Letter to the Editor: Comments on a Recent Article on the FMV of Physician Compensation
Monica Kaden, MBA, ASA, CHFP, Director, Marks Paneth LLP (Parsippany, N.J.) - Valuation Experts Clash Over Analysis of Transactional Data
- Counterpoint to ‘Tatum’s Law of Market Multiples’
By Ronald D. Rudich, Gorfine Schiller & Gardyn (Baltimore, Md., USA) and Howard A. Lewis, ENVRS and RiskGuidance Co. LLC (Miami/Fort Lauderdale area, Fla., USA) - In Defense of Tatum’s Law of Market Multiples
By Toby Tatum, Alliance Business Appraisal (Reno, Nev., USA) - Letter to the Editor: Comments on an Article on the Use of Statistics in the Transaction Method
Gary Trugman, Trugman Valuation, (Plantation, Fla., USA) - Letter to the Editor: Comments on an Article on the Use of Statistics in the Transaction Method
Mark G. Filler, CPA/ABV, CBA, AM, CVA, Filler & Associates PA (Portland, Maine, USA) - Letter to the Editor: Comments on an Article on the Number of Transactions for the GCTM
Robert C. Schlegel, Houlihan Valuation Advisors (Indianapolis, Ind., USA) - Letter to the Editor: Comments on Adequate Sample Size in the Transaction Method
Mark G. Filler, CPA/ABV, CBA, AM, CVA, Filler & Associates PA (Portland, Maine, USA) - Letter to the Editor: Response to Article on Separating Active and Passive Appreciation in the Value of a Marital Asset
Mark G. Filler, CPA/ABV, CBA, AM, CVA, Filler & Associates PA (Portland, Maine, USA) - This Short Paragraph Can Bolster the DLOM Section in Your Next Report
- Earnouts and the Monte Carlo Method: Practice Tips for Implementation
By Erica L. Wilson and A. Vincent Biemans, Berkeley Research Group LLC (Emeryville, Calif., USA) - Checklist for Initial Information Request to Analyze Replacement Compensation
- Using Jensen’s Alpha to Separate Active and Passive Appreciation
By Mark G. Filler, Filler & Associates, P.A. (Portland, Maine, USA) - The Use of Financial Projections in Solvency Opinions
By Craig Jacobson, GlassRatner (New York, N.Y., USA) - ‘Breaking Bad’ in the Business Valuation Profession
By Michael Paschall, Banister Financial Inc. (Charlotte, N.C., USA) - Valuation or Calculation: A Bad Appraisal Is Still a Bad Appraisal
By Alan S. Zipp, CPA, ABV, CVA, CBA, JD (Rockville, Md., USA) - Letter to the Editor: Calculation Engagements and USPAP
Carla G. Glass, CFA, FASA, Marcum LLP (New Haven, Conn., USA) and Jay E. Fishman, FASA, Financial Research Associates (Bala Cynwyd, Penn., USA) - Delaware’s Unwarranted Assumption That Capex Should Equal Depreciation in a DCF Model
By Gilbert E. Matthews, CFA, Sutter Securities Inc. (San Francisco, Calif., USA) and Arthur H. Rosenbloom, Consilium ADR LLC (New York City, USA) - A Method for Quantifying Contract Renewal Risk in Valuations
By Matthew Gold, CFA, and Matthew Ashby, CA, Ferrier Hodgson (Queensland, Australia) - Stale Fairness Opinions in Related Party Transactions Should Be Updated
By Gilbert E. Matthews, CFA, Sutter Securities Inc. (San Francisco, Calif., USA) - Valuation Expert Gains Key Insights—By Buying a Small Business
- Aruba Networks: Should Appraisals Rely on Unaffected Market Price?
By Gilbert E. Matthews, CFA, Sutter Securities Inc. (San Francisco, Calif., USA) - Testing the S Corp Value Premium for Realism and Reasonableness
By Sarah B. von Helfenstein, MBA, CVA, Value Analytics & Design (Cambridge, Mass., USA) - Users Reveal Insights and Tips on DealStats and the GCTM
- Industry Snapshot: Home Hospice Firms
- Available Remedies for Trade Secret Damages
By Richard F. Bero, CPA/ABV, CVA, CLP, The BERO Group (Waukesha, Wisc., USA) and Jon Margolies, J.D., Michael Best & Friedrich LLP (Milwaukee, Wisc., USA) - Have We Lost the Forest For the Trees?
By R. James Alerding, CPA/ABV, ASA, Alerding Consulting (Indianapolis, Ind., USA) - Rethinking the Traditional Levels of Value—Continuing the Conversation
By Andrew Strickland, FCA (Colchester, Essex, United Kingdom) - Work File Checklists For Fair Value For Financial Reporting
- Selecting Guideline Comps Discounts and Premiums
- Identified Assets and Liabilities
- Operating Rights
- Life for the Projection Period of Customer Intangibles
- Attrition Rates for Customer Intangibles
- Selection of Royalty Rates
- Contributory Asset Charges
- Tax Amortization Benefit
- Discount Rates Applicable to Various Assets
- Reconciliation of Intangible Asset Values
Section II. Business Valuation Conference Coverage
- The Price to Value Disconnect: No End in Sight
By David Foster, Business Valuation Resources (Portland, Ore., USA) - Takeaways From the AICPA FVS Conference
- A Recap of the Business Valuation Summit in Bangalore, India
By Raymond Moran, ASA, MRICS, MG Valuation LLC (New York City, USA) - New Twists and Turns in BV Highlight Annual SECBA Conference
- Growing Status of Fair Value Sparks Record Attendance at ASA FV Conference
- Tips and Takeaways From the NYSSCPA BV Conference
- Draft Regulations Take Center Stage at the BV Summit in Mumbai
By Raymond Moran, ASA, MRICS, MG Valuation LLC (New York City, USA) - Twelve Practical Ideas From NACVA’s 2018 Annual Conference
- Remarkable Progress for the Insolvency and Registered Valuer Programs in India
By Raymond Moran, ASA, MRICS, MG Valuation LLC (New York City, USA) - Recap of the AM&AA 2018 Summer Conference
By Robert Brackett, CPA, ICVS, CGMA, CVA, Crandall & Brackett Ltd. (Seattle, Wash., USA) - IVSC Annual Meeting Emphasizes Standards Adoption
By David L. Foster, CEO, Business Valuation Resources (Portland, Ore., USA)
Section III. Legal, Regulatory, Standards
- Lawyers Provide Pointers to Testifying Experts
- 2017’s Top Business Valuation and Damages Cases
- Valuation Experts Give Initial Thoughts on Tax Reform
- Re: Comments Concerning S Corp Tax-Affecting Article
By Alan Zipp (Rockville, Md., USA) - How the New QBI Deduction Impacts the Hypothetical Buyer and Seller
By Mark O. Dietrich, CPA, ABV (Framingham, Mass., USA), and Kevin R. Yeanoplos, CPA/ABV/CFF, ASA, Brueggeman and Johnson Yeanoplos PC (Tucson, Ariz., USA) - How New QBI Deduction Impacts the Hypothetical Buyer and Seller, Part 2
By Mark O. Dietrich, CPA, ABV (Framingham, Mass., USA), and Kevin R. Yeanoplos, CPA/ABV/CFF, ASA, Brueggeman and Johnson Yeanoplos PC (Tucson, Ariz., USA) - Tax Reform Puts Broader Spotlight on Reasonable Comp
- Q&As on the Impact of the 2017 Tax Act on Business Valuation
By Chris Mellen, ASA, MCBA, CVA, ICVS, ABAR, CM&AA, Valuation Research Corp. (Norwood, Mass., USA) - New Tax Legislation Consequences on U.S. Transfer Pricing and Intangibles
By Guy Sanschagrin, CPA/ABV, MBA, WTP Advisors (Minneapolis, Minn., USA) - New Analyses Reveal U.S. and Global BV Standards in Sync
- New Board and Pending Standards Highlight PCAOB Update
- What Appraisers Should Know About the History and Regulation of CannabiS
By Ron Seigneur, ASA, CPA/ABV/CFF, CVA, Seigneur Gustafson LLP (Lakewood, Colo., USA); Stacey Udell, CPA/ABV/CFF, ASA, CVA, HBK Valuation Group LLC (Cherry Hill, N.J., USA); and Brenda Clarke, CPA/ABV, CVA, CFF, Seigneur Gustafson LLP (Lakewood, Colo., USA)
Section IV. Business Valuation Profession and Practice Management
- Business Valuation Year in Review 2017
- Unqualified Valuers Costing Nigerian Government a Fortune
- Letter to the Editor: Improving Our Work Product (and Professional Image) … One Review at a Time
Clint Cronkite, Cronkite & Kissell LLC (Los Angeles, Calif.) - Case Study Reveals How to Use Neuroscience to Collaborate With the IRS
By Michael Gregory, Michael Gregory Consulting LLC (Roseville, Minn., USA) - BV Firm Marketing Experts Reveal Practice-Building Insights
- A Veteran Valuer Looks at the BV Profession
By Robert E. Kleeman Jr., CPA/ABV, ASA, CVA, OnPointe Financial Valuation Group LLC (Englewood, Colo., USA) - Building a Successful BV Practice Within a CPA Firm
By Robert E. Kleeman Jr., CPA/ABV, ASA, CVA, OnPointe Financial Valuation Group LLC (Englewood, Colo., USA)
Section V. Reviews of Data Sources and New Books
- Book Review: Understanding Business Valuation: A Practical Guide to Valuing Small to Medium Sized Businesses, 5th Edition
By James W. Brockardt, CBA, BCG Valuations (Pennington, N.J., USA) - Book Review: The BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, 2nd Edition
By Greg Endicott, CPA/ABV, ASA, CEIV, Strategic Value Group LLC (Los Angeles, Calif., USA) - DealStats Ushers in Next Generation of Transaction Data
- Book Review: The Cannabis Industry Accounting and Appraisal Guide
By Neil J. Beaton, CPA/ABV/CFF, CFA, ASA, Alvarez & Marsal Valuation Services (Seattle, Wash., USA) - New Guidance in Updated Edition of Economic Damages Book
- BVR to Launch New Platform for Estimating the Cost of Capital
- Major Changes Enhance the 2018 Edition of Mergerstat Review of M&A Activity
Section VI. Data
- Private Company Valuation Multiples
- Monthly Cost of Capital Data
