Ten ways lawyers kill their own experts
Financial experts can make or break a case for economic damages, lost profits, taxable fair market values, dispositions in divorce, shareholder dissolutions—and more, but many lawyers “inadvertently destroy their experts’ credibility,” says a recent report by the American Bar Association. The most common “bad attorney habits” include Ø Finding experts at the last minute Ø [...]
Tiger Wood’s problems reduced the value of companies he sponsors 2.3%
Two professors at UC Davis, a school that prides itself on unusual market analyses, have determined that shareholders of Nike, Gatorade and other Tiger Woods sponsors lost a collective $5 to $12 billion in the wake of the scandal involving his extramarital affairs. Victor Stango and Chris Knittel, professors of economics at the UC Davis [...]
Are you comfortable with multi-tier discounts?
The annual “Hardball with Hitchner” session closed the successful AICPA BV Conference with a question regarding the application (and courts’ acceptance) of multi-tiered discounts. The expert panel—Mark Zyla, Linda Trugman, Rob Burkett, and Bob Duffy—generally agreed that they each applied multi-tiered discounts when and where appropriate. Duffy, for instance, analyzes the various entity tiers to [...]
Contribute to best practices guidance on control premiums
The Appraisal Foundation’s third Working Group is currently developing best practices guidance on the application of control premiums in financial reporting. Prior to releasing an Exposure Draft, the Group is soliciting broad input from the BV community on a key discussion questions regarding the assessment and measurement of control premiums, including: • Should you adjust [...]
The quality of valuations for financial reporting is improving…but so is litigation
That’s the summary of comments from the panel of “Big 4” auditors at the ASA Fair Value Summit, held November 13th in the San Francisco offices of KMPG. The valuation environment is becoming more competitive and the days of “rogue/cowboy” valuations are over, says Josh Cashman (Arcstone Partners), who provided a special report on the [...]
Be wary of tax risks when assessing IP holding companies
When the Talbots Company went public in 1993, it loaned $103 million to a subsidiary to purchase the Talbots trademark and collect royalties, permitting the parent company to shave over $1.1 million from its annual state tax bill. But the holding company returned over 96% of royalties to its parent—and in Talbots v. Mass. Comm’r [...]
Alerding anticipates resurgence in community bank valuations
The number of transactions involving community banks and financial institutions should increase significantly in the next three to five years, according to Jim Alerding, who spoke on this niche topic at the most recent AICPA National BV Conference in San Francisco. “It may not happen right away, because of the current economy,” he said, “but [...]
Two new studies support higher DLOM
Perhaps nothing in business valuation is more controversial than the discount for lack of marketability (DLOM).This one adjustment can have a sizable impact on clients’ tax obligations. So, naturally, one question frequently lingers in attorneys’ minds at the end of estate-planning engagements: Did the business appraiser select an appropriate discount? . . . We offer a [...]
Monthly updates to the equity risk premium from Damodaran
“It has been an interesting year, watching the market recover from the current crisis—a little too fast for my taste,” writes Professor Aswath Damodaran in his latest e-alert, Damodaran Online. “The equity risk premium in the S&P; 500, which was 6.43% at the start of the year, is now back down below 5%,” he says. [...]
2009 Ends with Pioneering New Work
“Like many things in the public market, ‘one thing’ both affects, and is affected by, many other things,” says Nancy Fannon in the introduction to her forthcoming The Effect of Tax Policy on Value in the Private Capital Markets. Here, that “one thing” is shareholder taxes, the subject of Fannon’s groundbreaking new research. While this [...]
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