Business Valuation Update Yearbook, 2020 Edition
January 2020 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 2020. 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.
Highlights of the Yearbook include:
The Yearbook is divided into eight easy to maneuver sections:
- Section I. Business Valuation Approaches, Methods, and Entity-Specific Issues: Covers the latest news of the profession as well as the most discussed and most controversial business valuation topics that arose over the past year. Topics include techniques for dealing with the valuation impacts of the Tax Cuts and Jobs Act, important new research on the FMV of physician compensation, a new technique to value small private promissory notes, evolving issues in proving lost profits the ongoing controversy over calculation reports, work file checklists for fair value for financial reporting, and more. Plus, a new series of articles called “Tales From the Trenches” that reveals valuable tips based on the experiences of seasoned valuation experts—things that can only be learned through long experience in the field.
- Section II. Cost of Capital: It was an exciting year with a new kid on the block emerging—a new platform for estimating cost of capital, BVR’s Cost of Capital Professional. Also, important research on the size effect was published and some buzz was created from the idea of shying away from public market data when estimating private cost of capital.
- Section III. Business Valuation Conference Coverage: BVR editors attend all of the s premiere business valuation conferences both in the U.S. and around the globe and provide on-the-ground reporting of topics and issues you need to know about.
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Section IV. Legal, Regulatory, Standards: It’s always important to stay up on the latest news regarding the legal, regulatory, and BV standards landscape. 2019 was a momentous year for business valuation in several respects. Two important court cases emerged that may spell the end of the long battle with the IRS over tax affecting PTEs. Also, serious concerns have been triggered by accounting rulemakers thinking about upending the goodwill impairment model.
Also of note is the ongoing high rate of successful Daubert challenges seeking to exclude valuation experts from testifying, a new credential emerged for professionals doing fair value measurements of financial instruments, and the Delaware Chancery court’s decisions in several cases that embrace the use of deal price to establish fair value in statutory appraisal matters. Also of note is an interesting proposal to restructure some basic business valuation terms.
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Section V. Business Valuation Profession and Practice Management: Landmark research was released on valuation firms’ profit drivers and successful practice management strategies. A number of articles reveal insights into how firms are attracting more valuation work and what management practices have worked best.
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Section VI. Reviews of Data Sources and New Books: Includes a look at some new resources for valuation professionals, including a workflow platform, new source for industry research, compensation data, a new benchmarking platform, a UK edition of Mergerstat Review, and important updates to DealStats, the leading database of transactions in the private and public sectors.
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Section VII. New! U.S. and Global BV News Roundup: New to this edition is a month-by-month compilation of news briefs and important announcements related to the business valuation profession not covered in the main articles.
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Section VIII. Data: An amalgamation of the monthly cost of capital data presented in tabular and chart form. 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
- Determining the FMV of Small Privately Held Promissory Notes
By Bruce A. Johnson, Munroe, Park & Johnson Inc. (San Antonio, Texas, USA) - Calculation Engagements: Still Broken, Still Bad
By Michael Paschall, ASA, ABV, CFA, JD, Banister Financial Inc. (Charlotte, N.C., USA) - Tips for Valuing—and Designing—Buy-In and Buyout Agreements for Medical/Dental Practices
By Mark O. Dietrich, CPA/ABV (Framingham, Mass., USA) - Calibration With OPM in Early-Stage Enterprises: A Fair Value Update
By Neil Beaton, Alvarez & Marsal (Seattle, Wash., USA); Andreas Dal Santo, BlueVal Group (New York, N.Y., USA); and Antonella Puca, BlueVal Group (New York, N.Y., USA) - Enterprise Value Adjustment Multiple for Post-Tax Reform Valuations
By Daniel R. Van Vleet, The Griffing Group (Oak Park, Ill., USA) - A Dozen ‘Don’ts’ to Help Survive a Divorce Engagement
- Physician Distribution, Mobility, Fair Market Value, and Compensation Surveys
By Mark O. Dietrich, CPA/ABV, (Framingham, Mass., USA) - How the Healthcare Industry Misuses and Abuses Survey Data
By Mark O. Dietrich, CPA/ABV (Framingham, Mass., USA) and Timothy Smith, TS Healthcare Consulting (Dallas/Ft. Worth, Texas, USA) - Evolving Issues in Proving Lost Profits in Commercial Litigation
By Stanley P. Stephenson, Litigation Economics LLC (Tampa, Fla., USA); Gauri Prakash-Canjels, Litigation Economics LLC (Washington, D.C., USA); and David A. Macpherson, Trinity University (San Antonio, Texas, USA) - The Secrets to Expert Testimony That Engages and Persuades a Court
By Deborah Johnson, High-Stakes Communication (Phoenix, Ariz., USA) - Industry Snapshot: Automobile Dealers
- Work File Checklist for Documenting the Fair Value of Inventory
- Work File Checklist for Documenting the Fair Value of Contract Liabilities
- Reasonable Certainty for New Business Lost Profit Calculations
By Josh Shilts, Villela & Shilts LLC (Jacksonville, Fla., USA) - Tales From the Trenches:Company Research: The Internet May Be Right, But It May Also Be Wrong!
By Robert E. Kleeman Jr., CPA/ABV, ASA, CVA, OnPointe Financial Valuation Group LLC (Englewood, Colo., USA) - Tales From the Trenches:How to Successfully Use Statistics—Without Being a Data Guru
By R. James Alerding, CPA/ABV, ASA, Alerding Consulting LLC (Noblesville, Ind., USA) - Tales From the Trenches: The Case of the 70% Equity Interest Valued as a Minority
By Robert E. Kleeman Jr., CPA/ABV, ASA, CVA, OnPointe Financial Valuation Group LLC (Englewood, Colo., USA) - Tales From the Trenches: Buildup Approach—The Data May Be Correct, But Is the Conclusion Appropriate?
By Robert E. Kleeman Jr., CPA/ABV, ASA, CVA, OnPointe Financial Valuation Group LLC (Englewood, Colo., USA) - Valuing Minority Interests in the UK Is ‘Especially Challenging’
- Acquisition Premiums Amid Added Complexity in Market Transactions
By Evan Miller, CPA, Whitley Penn (Dallas, Texas, USA) - Understanding Tax Amortization Benefit Considerations and the International Impact
By Mercedes Falcon, ASA, Valuation Research Corp., (San Francisco, Calif., USA) - Factoring Workforce Engagement Into a Business Valuation
- Rohling the Dice With a Calculation Engagement
By Michael Paschall, ASA, ABV, CFA, JD, Banister Financial Inc. (Charlotte, N.C., USA) - Valuing a Financial Advisor’s Book of Business
By Howard A. Buchler, J.D. - Using Industry Benchmarks to Establish Secure Negotiating Positions for M&A Purposes
By Casey Karlsen and Seth Webber, BerryDunn (Portland, Maine) - Latest Resources to Help Improve the Valuation of Financial Instruments
Section II. Cost of Capital
- BVR’s New Cost of Capital Platform Makes Its Public Debut
- Letter to the Editor: Comments on the Cost of Capital Professional
By Eric Nath, ASA , Eric Nath & Associates (San Francisco, Calif., USA) - Response to Eric Nath’s Comments on the Cost of Capital Professional
- Two Articles Addressing Firm Quality and Its Impact on the Size Effect
By Roger J. Grabowski, FASA, Duff & Phelps LLC (Chicago, Ill., USA), and Anas Aboulamer, Ph.D., Duff & Phelps LLC (Toronto, Canada) - No End in Sight to Size Effect Debate
By Dr. Michael A. Crain, CPA/ABV, CFA, CFE, Florida Atlantic University (Boca Raton, Fla., USA) - Inclusion of Betas in CCPro Platform Puts the Spotlight on the IRP
- Appraiser Shuns Public Data for Private Cost of Capital
- Concerns Over Data Security in Online Cost of Capital Tools
- Is Your Cost of Capital Data Backing You Into a Corner?
- BVR and Duff & Phelps Cost of Capital Platforms Go Head-to-Head at VSCPA
- New Meta-Analysis Study Reveals Diminished Size Premium
- Musings on the Cost of Capital
By Ron Seigneur, MBA, CPA/ABV, ASA, CVA, Seigneur Gustafson LLP (Lakewood, Colo., USA)
Section III. Business Valuation Conference Coverage
- Takeaways From the 2018 ASA Advanced BV Conference
- Hot Topics Abound at ASA Fair Value Conference in New York City
By Daniel R. Van Vleet, ASA, The Griffing Group (Oak Park, Ill., USA) - Attorneys and Valuers Strengthen Ties at AAML/BVR Divorce Confab
- Front-Burner Issues Presented at This Year’s NYSSCPA BV Conference
- 10 Things to Know From the NACVA 2019 Conference
- Possible Change to Goodwill Model Generates Buzz at ASA Fair Value Conference
- Gems From the ASA Advanced BV Conference in New York City
- Reports From Global BV Conferences: ICVPME, IVSC, IACVS, ICAEW
Section IV. Legal, Regulatory, Standards
- 2018 Key Business Valuation and Damages Cases
By Sylvia Golden, Esq. - ‘Oh, What a Tangled Web We Weave’1: Recent Developments in Delaware on Investment Bank Liability for M&A Services
By Arthur H. Rosenbloom, Consilium ADR LLC (New York, N.Y., USA) and Gilbert E. Matthews, CFA, Sutter Securities Inc. (San Francisco, Calif., USA) - Current Observations on the Valuation Impact of the TCJA
- Update on the AICPA’s New CVFI Credential
- Daubert Rulings Reflect Courts’ Disparate Views on Gatekeeping Role
By Sylvia Golden, Esq. - Yukon Court Awards Premium in Fair Value Determination— A Comment on Carlock v. ExxonMobil Canada Holdings ULC
By Chat Ortved and Khaled Abdel-Barr, Lawson Lundell LLP (Vancouver, Canada) - How Changes to Transfer Pricing Rules Impact Valuation Practitioners
By Kelvin King, Valuation Research Group (United Kingdom), and Raymond Weisner, Valuation Research Group (United States) - Kress and S Corp Valuations: Be a Little Cautious
By Daniel R. Van Vleet, ASA, The Griffing Group (Oak Park, Ill., USA) - Avoiding Ethics Violations When Working on Divorce (or Other) Cases
By Sylvia Golden, Esq. - Letter to the Editor:Response to a Reader’s Comments Concerning the Kress Case
- Highlights of 2019 Delaware Valuation Decisions
By Gilbert E. Matthews, CFA, Sutter Securities Inc. (San Francisco, Calif., USA) - Survey of Daubert Challenges to Experts Suggests Red Flags to Avoid
Section V. Business Valuation Profession and Practice Management
- Business Valuation Year in Review 2018
- Survey Uncovers the Most Effective Ways to Get More BV Business
- Career Option: Neutral Financial Professional in Collaborative Divorce Proceedings
By Sylvia Golden, Esq. - VRC Mixes Valuation Work With Giving Back to the Profession
- BVFLS Firms Disclose Their Best Management Practices
- Timeline Reveals Advances in Building Trust in Fair Value for Financial Reporting
- Business Valuation Terms Need Restructuring Based on Value Drivers
- By James A. Lisi, The Mentor Group Inc. and Santa Barbara Valuations Inc. (Santa Barbara, Calif., USA)
Section VI. Reviews of Data Sources and New Books
- Synergyflow: A New System Designed to Add Intelligent Workflow to the BV Process
- BVR Now Offers Vertical IQ as an Additional Source for Industry-Specific Research
- Vertical IQ: Very Smart Industry Research
By Stuart Weiss, CPA, ABV (Portland, Ore., USA) - New Study Reveals BV Research Sources of Choice
- A Conversation With the New Editor of Business Valuation Review™
- RCReports Launches Study on Reasonable Compensation Valuation Practices
By Paul Hamann, RCReports (Denver, Colo., USA) - Determining Reasonable Compensation Using RCReports Data
By KC Conrad and Marsha Conrad, American Business Appraisers LLC, (Phoenix, Ariz., USA) - Control Premiums and Deal Flow Analyzed in 2019 Mergerstat Review
- Rules of Thumb Highlight the 2019 Business Reference Guide
- Do You Really Know Your Data for Determining Discounts?
By Carsten Hoffmann, ASA, and Philip Schwab, ASA, Stout (Irvine, Calif., USA)
Section VII. BVU U.S. AND GLOBAL NEWS AND TRENDS ROUNDUP
- January 2019 U.S. and Global BVU News and Trends
- February 2019 U.S. and Global BVU News and Trends
- March 2019 U.S. and Global BVU News and Trends
- April 2019 U.S. and Global BVU News and Trends
- May 2019 U.S. and Global BVU News and Trends
- June 2019 U.S. and Global BVU News and Trends
- July 2019 U.S. and Global BVU News and Trends
- August 2019 U.S. and Global BVU News and Trends
- September 2019 U.S. and Global BVU News and Trends
- October 2019 U.S. and Global BVU News and Trends
- November 2019 U.S. and Global BVU News and Trends
- December 2019 U.S. and Global BVU News and Trends
Section VIII. Data
- Private Company Valuation Multiples
- Monthly Cost of Capital Data
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