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Welcome to the second and final part of our blog series on lack of control discounts and control premiums, two critically important issues when calculating the value of a company. We tackled some of the fundamental questions attorneys may have regarding these concepts...
When working with appraisers, attorneys are likely to grapple with questions about the relationship between two key business valuation concepts involving control exercised over a company. The first concept is the “lack of control discount,” which, in simple terms, is...
In my last blog post, I discussed the two types of transactions—stock and asset—that are found in the databases appraisers use when applying the guideline transaction method in litigated business valuation and how to use these transactions to determine value. In...
When reviewing a business valuation report, an attorney should check to see that the business appraiser considered the three approaches to value—market, income, and asset. While each approach has its own methodologies, our focus in this blog will be on the...
When a couple is divorcing in an equitable distribution or community property jurisdiction and their assets include ownership in a closely held company, the value of the business typically must be determined. Analyzing the company’s cashflow is imperative during such...
During my over two decades of working in the valuation profession, I have valued several hundred entities and reviewed hundreds of valuation reports, including business valuation calculation reports, summary reports, and comprehensive valuation reports prepared by...
The impact of COVID-19 on the value of private company interests is being actively explored and discussed nationwide by business valuation professionals, their professional trade associations, and users of business valuations (e.g. attorneys). Because COVID-19 can...
The US Tax Cuts and Jobs Act (“TCJA”) passed by Congress on December 20, 2017, will impact forecasts of a company’s cash flow and thereby will likely impact the valuation of a company. One of the forecast elements impacted is the forecast of capital expenditures,...
As discussed previously, once it has been determined that a separate business interest appreciated in value during a marriage, learned treatises and case law often delineate the active passive analysis into the following elements: Identifying and quantifying market...
As discussed previously, once it has been determined that a separate business interest appreciated in value during a marriage, learned treatises and case law often delineate the active passive analysis into the following elements: Identifying and quantifying market...
The business appraiser performing an active passive appreciation analysis looks to their engaging legal counsel to define and interpret state law in the particular jurisdiction. An active passive analysis is performed when state divorce law requires a determination of...
Part II of my working capital blog identified methods often used by business appraisers when forecasting working capital. In this installment, I will present some additional thoughts regarding this topic. Depending on the facts and circumstances, it is typically appropriate to consider the company’s historical working capital ratios and industry working capital metrics at the composite level (e.g. total working capital), as well as each separate component of working capital (e.g. accounts receivable, inventory, accounts payable, etc.).
