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Developing Supportable Attrition Rates in Customer Relationship Valuations

Developing Supportable Attrition Rates in Customer Relationship Valuations

Valuation of the Customer Base

The value of the customer base is a function of attribution. Measuring percentage attribution requires access to internal data, and this data is often missing. Where it is available, the valuation professional can use the Constant Revenue or Revenue Decline Model. This article explains how these models are developed.

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FASB: ‘Going Concern’ is Management’s Responsibility

FASB: ‘Going Concern’ is Management’s Responsibility

Going-ConcernExecutive managers of companies and not-for-profit organizations must make more uniform disclosures if there is significant doubt about a company’s ability survive, according to new standards released by the Financial Accounting Standards Board August 27, 2014.

Under Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of…

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Identifying and Calculating Recoverable Damages in Cyber Security Breaches—Part 2

Identifying and Calculating Recoverable Damages in Cyber Security Breaches—Part 2

Predicting Cyber Security Breaches

Cyber security breaches often result in the improper transfer of personal identifying information or sensitive financial and health information. This article focuses on the identification of potential cyber security breaches and how courts are addressing the presentation of such cases, including the issue of damages.

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Identifying and Calculating Recoverable Damages in Cyber Security Breaches—Part 1

Identifying and Calculating Recoverable Damages in Cyber Security Breaches—Part 1

Predicting cyber security breaches

Cyber security breaches often result in the improper transfer of personal identifying information or sensitive financial and health information. This article focuses on the identification of potential cyber security breaches and how courts are addressing the presentation of such cases, including the issue of damages.

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The Guideline Transactions Method

The Guideline Transactions Method

Problems and solutions

The Guideline Transaction Method (GTM) remains a viable option for valuing businesses; the question is whether it is being properly applied. In this article, Eric Barr proposes that despite the recent negative press, the GTM can provide valuable insight.

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CPAs File Class Action Against IRS

CPAs File Class Action Against IRS

1040Two CPAs in Washington D.C. have filed a class action lawsuit against the IRS for requiring a yearly registration and related fee in order to maintain a preparer tax identification number (PTIN). The suit, which involves 700,000 practitioners, seeks to recover $150 million in fees that the IRS has collected since the regulation passed in 2010. Four years ago, the IRS put the new rule into…

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Billion Dollar Battle for Dollar Store

Billion Dollar Battle for Dollar Store

DollarStoreBecause the economic recovery we’ve all been told is happening never really arrived, dollar stores across the United States are doing big business these days. Because of that, there’s a huge takeover battle going on between the nation’s three largest dollar store retailers. Apparently, there’s billions to be made, one dollar at a time.

Family Dollar Stores (FDS) originally rebuffed an unsolicited…

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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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