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Considering the Subject Industry in the Discounted Cash Flow

Considering the Subject Industry in the Discounted Cash Flow

Method for dissenting shareholder appraisal actions

The consideration of the subject company’s industry (the subject industry) when applying the Income Approach—Discounted Cash Flow Method—is an important issue for the valuation analyst, specifically as it relates to shareholder appraisal rights actions. The Delaware Chancery Court regularly provides guidance as to the proper consideration of the…

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Life and Death: Valuing Life Insurance

Life and Death: Valuing Life Insurance

life-insuranceThis past summer, the firm of Pluris Valuation Advisors LLC released a detailed white paper on the valuation of life insurance. According to the authors, when valuing life insurance or life insurance-linked instruments such as split-dollar collateral assignment receivables or split-dollar promissory notes, there are only three elements of Fair Market Value. These include:

  • Illustrations from the…

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Calculations and Opinions: Bringing Clarity to a Cloudy Issue

Calculations and Opinions: Bringing Clarity to a Cloudy Issue

Opinions are like viewpoints; everyone has one

Opinions are often provided in connection with calculation values and a conclusion of value. SSVS No. 1 does not prohibit or explicitly endorse either. In this article, Jim Hitchner shares his views on whether the term “opinion”―offered in a litigation or non-litigation engagement—should be used as part of the engagement or offered in connection with…

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IBA Opens Membership to Non-Certified Business Appraisers (CBAs)

IBA Opens Membership to Non-Certified Business Appraisers (CBAs)

Reminder to NACVA members of new opportunity

This article calls attention to the fact that NACVA members and other business valuation practitioners once again have the opportunity to take advantage of the many additional benefits of belonging to members of the Institute of Business Appraisers (IBA), an affiliate of NACVA.

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Valuation Gymnastics in Final Deal for the Clippers

Valuation Gymnastics in Final Deal for the Clippers

Basketball-ValueIn the early days of the scandal surrounding LA Clippers owner, Donald Sterling, certain terms of his punishment by the NBA were a given. What no one was sure of was whether or not he would be forced to sell the team. As speculation turned into fact, it seemed as if valuation estimates for the team were coming out of the woodwork. Some said the team price tag could go as high as $1 billion.…

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Netflix Latest to Oppose Comcast Time Warner Merger

Netflix Latest to Oppose Comcast Time Warner Merger

netflix_web_logoNetflix is the latest company to join a petition asking the Federal Communications Commission (FCC) to deny the pending $45 billion Comcast / Time Warner merger. In a 256-page report, Netflix details how the merger will give the new entity too much control over the internet, and that this new power enable it to stifle online video distributors that it sees as competition. Comcast continues to…

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Purchase Price Allocation

Analyze early and avoid earnings surprises

The purchase price allocation (PPA) process is often treated as an afterthought in mergers and acquisitions (M&A). Thinking about PPA can help guide a deal to a more predictable conclusion. In the most rewarding deals, a prompt PPA process helps acquirers analyze, from a financial reporting point of view, the primary drivers or intangible values…

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Common Risks Often Missed During Due Diligence

Common Risks Often Missed During Due Diligence

The impact on shareholder value

Knowing the value of a business and delivering real value to a client company entails far more than using EBITDA multiples or going along with a rule of thumb to keep the peace. As professionals, valuators must be far more rigorous in their engagements, and focus on delivering value. The obligation to identify, measure, manage, and mitigate the risks are their…

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IRS Rewriting Tax Law?

IRS Rewriting Tax Law?

IRS-QuestionAmong many legal challenges to the validity of the Affordable Care Act (ACA), is Halbig vs. Burwell. The challenge concerns a passage in the statute, when literally read as worded, makes federal tax credits for insurance programs available only to those enrollees in states that have created a state-designed and operated healthcare exchange. Read as it currently exists, the statute does notallow…

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Calculation Reports and Valuation Software

Calculation Reports and Valuation Software

The use and abuse of valuation software

Valuation software is readily accessible by non-credentialed accountants that provide “valuation” services at a low price point. The reports generated vary from a single page to an 80+ page report that is vague, contradictory, and generates a meaningless value. Canned valuation software is often abused, but can be an asset when used properly.

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Case Law Update: Recent Delaware Court Cases

Case Law Update: Recent Delaware Court Cases

Fair value litigation and more

The Delaware Chancery Court is considered one of the pre-eminent U.S. courts when it comes to business valuation and governance issues. This article reviews some recent court decisions pertinent to valuation practitioners and which will be discussed in more detail in NACVA’s Federal and State Case Law Update this fall.

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Sudden Loss and Estate Planning

Sudden Loss and Estate Planning

Robin-WilliamsIt was a shock to most people when the news hit that actor and comedian, Robin Williams, had suddenly passed away earlier this month at the age of 63. While most were aware of Mr. Williams’ hard-won 20-year sobriety milestone, what they didn’t know was the financial struggle he was facing in recent years. Forbes.com takes a respectful and detailed look at the estate planning of Mr. Williams,…

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Profits without Prosperity

RecessionNow that we’re six years into the Great Recession, financial experts tell us that the stock market is booming, and the economy is once again robust. Strangely, the vast majority of Americans aren’t sharing in this so-called recovery and the benefits of it are virtually non-existent, unless you look at the top 0.1% of wage-earners in the country, namely the CEOs of major corporations.…

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Intangible Assets in Healthcare

Intangible Assets in Healthcare

Approaches and Methods Used to Realize Income from Licensing IP Assets

This article discusses valuation topics related to a subset of intangible assets which are most applicable to healthcare businesses. Business valuation professionals are often engaged to value specific intangible assets, either as part of a detailed business valuation or after a transaction has been completed. When valuing…

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Fifth Circuit Vacates 40 Percent Valuation Penalty

Fifth Circuit Vacates 40 Percent Valuation Penalty

What This Means for Appraisers

In a new twist involving litigation that impacts valuation analysts, on June 11, 2014, the Fifth Circuit Court of Appeals upheld the Tax Court’s valuation of a historic preservation façade conservation easement, but vacated the Tax Court’s imposition of a gross undervaluation penalty. The latest ruling, as Joe Brophy explains, raises a host of new issues.

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