You know I don’t like WACC. Yet another reason is that it requires market value weighting of debt as well as equity. Corporate debt yields have risen considerably, so fixed-rate company debt has lost market value. Debt valuation is thus more complicated, and has to be thought through in any valuation, but particularly if you [...]
If you valued a business interest (such as a FLP) that owned Madoff securities ON A VALUATION DATE BEFORE THE FRAUD WAS DISCOVERED, should you now revise your opinion?
Going back, once again, to Revenue Ruling 59-60, Section 3. Paragraph 3, valuations are based on facts available as of the valuation date. The fraud was not [...]
I just realized that well over a year from now – as late as October 15, 2010, I will be doing (tax) valuations as of early 2009 for people who have extended the filing of their 2009 tax returns.
Who knows what the world will be like then…but more importantly, will we remember and be able [...]
I am often asked to appraise multiple entities owned by the same individuals (usually family members) in exactly the same proportions, types of interests, rights, and so forth. As an example, Smith family members own two companies, “A” and “B”. “A” might be a manufacturing business that supplies “B”, the distributor; or “A” might be [...]
Lately it seems like every business owner, seller or buyer I speak with is fixated on EBIT or EBITDA and valuation multiples thereof. They all think “businesses are worth (pick a number) times EBITDA”. Some cite industry norms and others quote multiples from the financial press. Almost everyone concedes that EBITDA levels and multiples are [...]
The widespread adoption (and abuse) of employee stock options, advances in valuation technology, and new tax (Section 409A) and financial accounting (FAS 123R) rules have caused appraisers and company managers to focus much attention on the technical aspects of option valuation. That’s as it should be. Section 409A sets a minimum exercise price to avoid [...]
One of my valuation mentors taught me early on to periodically reread Revenue Ruling 59-60 with a fresh pair of eyes. (In my case, this requires reading glasses.)
I think this particularly important to do in these financially perilous times, and just did so. I was very interested in what 59-60 had to say about periods [...]
Institute of Business Appraisers Co- Sponsors the 2nd Annual Fair Value for Financial Reporting Summit: Feb 2-3, 2009 in New York.
Here is what I say to my clients and their advisors.
My valuation opinion is independent and objective, as required by federal law and professional appraisal standards. I will support it with all of the facts and proper methodology that I can bring to bear. I will defend it to the death. I have been through [...]
IBA Governors Approve New Board and Committee Positions
IBA Governors met in Dallas, Texas, in January, 2009, and approved a new governance structure for the Institute. The Governors stated that “it is in the IBA membership’s interest to provide for member oversight of critical IBA activities. IBA’s leadership shall support the organization by promoting a high [...]
