My last post compared bottom-up and top-down forecasts. This one expands on that comparison. To keep it very simple, let’s focus on forecasting just next year’s revenue for a startup business that has no historical track record. The business is a one-man car detailing service that will charge $100 per car and [...]
A recent engagement reminded me of some important lessons about preparing a forecast for client review (when the client does not prepare their own).
I was doing an annual ESOP valuation for a company that has had a tough year because of extraordinary circumstances (a lawsuit) that caused it to suffer big but temporary revenue and [...]
The business appraisal profession is growing rapidly, and with these changes comes the requirement for frequent and dynamic education that meets the needs of our ever-changing business landscape.
Featured in Wall Street Journal’s MarketWatch News site and CBS’ Money Watch, IBA’s new certification workshops, 8003 Introduction to Business Appraisal and 8004 comprehensive Certified Business Appraiser, [...]
TAX COURT REJECTS TAXPAYER’S APPRAISAL AS “NOT QUALIFIED,” THUS SIDESTEPPING ANY EVIDENCE OF VALUE
Assuring the Quality of an Appraisal is More Important than Ever
By Howard A. Lewis, Executive Director
The United States Tax Court, in a memorandum decision (Scheidelman v. CIR, T.C. Memo. 2010-151, No. 15171-08), dated July 14, 2010, sustained deficiencies and penalties assessed against [...]
Loss Claims Resulting from the Deepwater Horizon Oil Spill and the BP Claims Process
On July 29, 2010 the Institute of Business Appraiser (IBA) will co-host a cutting edge two hour webinar to address the economic loss claims that inundate the gulf coast region as a result of the BP Oil Spill. Businesses throughout the gulf [...]
Most appraisers I know believe that “S” corporation earnings should be tax-effected. I do, too.
Having said that, however, I have run into an exception: “S” corporations owned all or in part by ESOPs. ESOPs are income tax-exempt. A client owns 60% of an “S” corporation,and the ESOP owns the rest. The Company makes [...]
I just completed (early July 2010) a valuation of a controlling business interest owned by a trust benefiting the children of a decedent (he passed away in 2009). The minority interest is owned by the husband of one of the beneficiaries. That individual has served very capably as the chief executive officer of [...]
Can we capitalize the earnings or cash flow of a declining business? As Curly of Three Stooges fame would say: “Soitenly!”
Two businesses have the same current earnings or cash flow and risk level and a 20% discount rate. One is growing at 5% annually, the other declining at 5% annually. The cap rate [...]
