Business Valuation Review最新文献

{"title":"Two Methods to Adjust Observed Control Premia for Valuation Purposes","authors":"Vincent Covrig, Daniel L. Mcconaughy, M. K. Travers","doi":"10.5791/0882-2875-35.1.30","DOIUrl":"https://doi.org/10.5791/0882-2875-35.1.30","url":null,"abstract":"The greater a target company’s leverage, the less cash, or acquirer’s shares, a buyer needs to control the target enterprise. Based on this idea, the Appraisal Foundation Working Group’s Discussion Draft, The Measurement and Application of Market Participant Acquisition Premiums, recommends as a best practice that appraisers adjust takeover premia for leverage. Previous recent research found empirical results consistent with this, namely, that higher equity takeover premia are related to higher pre-deal leverage levels, controlling for size, industry, profitability, and other factors. In this article, we provide valuation professionals with two methods with which to adjust observed transaction premia, based upon the subject appraised company’s leverage along with other company and deal characteristics that can be captured through use of readily available market data.","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131565010","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Part I: Appraiser Versus Real World Debates: How Many Appraisers Can Dance on the Head of the Private Capital Markets?","authors":"J. Paglia","doi":"10.5791/0882-2875-35.1.2","DOIUrl":"https://doi.org/10.5791/0882-2875-35.1.2","url":null,"abstract":"The largest unchartered territory on the business appraisal map is the private capital markets. These markets contain more than 99% of business entities comprising millions of companies and generate half of the gross domestic product of the United States and the world. Not only are the companies operating in these markets difficult to value, but there is no, one, unified agreed upon method of how to approach cost of capital determinations for valuation engagements. The intention of this series of papers is to take a look at how we approach cost of capital to value private companies. This first article will take a look at the practices and methods appraisers use as well as some of the problems with those methods. Article two will delve more deeply into understanding the differences in the private capital markets, clearly define the relevant financing and capital markets for privately held companies, and examine the private capital markets, including trends, current practices, and activities before concludi...","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128792658","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Why Salvador Dali Would Not Have Made a Good Appraiser: BV and Real Estate Discount Rates","authors":"R. Grabowski, Jaime C. d'Almeida, John A. Duvoisin","doi":"10.5791/0882-2875-35.1.12","DOIUrl":"https://doi.org/10.5791/0882-2875-35.1.12","url":null,"abstract":"The famous artist Salvador Dali is quoted as saying “What is important is to spread confusion, not eliminate it.” While this may be so in art, it is unlikely to be the mantra of any valuation practitioner. Valuation is practiced by thousands of individuals, and it is important that these practitioners all speak the same language so the clients who rely on these valuations can make unified and reasonable decisions. Problems arise, however, when similar language is used to mean different things to different people. Such is the case in business valuation and real estate appraisal. Generally, real estate appraisers and business valuation practitioners do not venture into each other’s territory. However, there is often good reason to do so, and these situations highlight the importance of consistency, particularly with respect to the use of language and the interpretation of language. For example, based on our own experience, the term “ unleveraged Internal Rate of Return [IRR],” as used by real estate apprais...","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"102 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121482270","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Valuation Using Industry Multiples: How to Choose the Most Relevant Multiples","authors":"Edouard Chastenet, A. Marion","doi":"10.5791/0882-2875-34.4.173","DOIUrl":"https://doi.org/10.5791/0882-2875-34.4.173","url":null,"abstract":"Our research focuses specifically on the methodology to be applied to improve the relevance of the multiples-based valuation method regarding the identification of the most relevant multiples (i.e., that reduce the relative absolute valuation error within any industry-based peer group). In line with prior empirical studies, our results confirm that Enterprise Value multiples based on EBIT and EBITDA perform better, compared to Sales and Capital Employed, and that multiples based on forward-looking EBIT and EBITDA are more relevant compared to corresponding actual earnings. In the absence of forward-looking earnings, available at the date of valuation, our study shows that EBITDA multiples provide better estimates than EBIT multiples do. Beyond these general results, the approach implemented in our research can be easily reproduced by practitioners (e.g., financial analysts, M&A advisors, independent appraisers) to identify case-by-case the multiples that are the most relevant within any industry-based peer group.","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-01-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130088500","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Thoughts on Estate of Richmond Tax Court Case","authors":"John Byrne","doi":"10.5791/0882-2875-34.3.127","DOIUrl":"https://doi.org/10.5791/0882-2875-34.3.127","url":null,"abstract":"The case Estate of Helen P. Richmond, Deceased, Amanda Zerbey, Executrix, Petitioner v. Commissioner of Internal Revenue, Respondent, T.C. Memo 2014-26, was not your ordinary family limited partnership tax court case. The subject interest was a noncontrolling interest in a C corporation that held only marketable securities with significant built-in capital gains (BICGs). The case was heard in the 3rd Circuit, which—unlike the 5th and 11th Circuits that had previously accepted a dollar-for-dollar reduction in value for the BICG tax—had not ruled on this issue. Another interesting issue was the selection of the valuation approach; the estate expert relied on the income approach, whereas the IRS expert relied on the asset approach. This article comments on weaknesses in the court's valuation approach and why the income approach is a valid method when valuing a noncontrolling interest.","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121891919","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Pass-through Entities: A Tax Equivalent Method to Adjust the Cost of Equity","authors":"Mike Smith","doi":"10.5791/0882-2875-34.2.57","DOIUrl":"https://doi.org/10.5791/0882-2875-34.2.57","url":null,"abstract":"A contentious debate continues between the IRS, tax courts, and valuation professionals regarding the valuation of pass-through entities. Considerable diversity of practice has risen around the taxation treatment and benefit determination of pass-through entities when using cost-of-capital estimates derived from public equity markets. Lacking direct evidence of the cost-of-equity capital in a privately held entity, valuation practitioners often turn to the public equity markets for a cost-of-equity measure to use when applying income-based valuation methods. Over the years, valuation practitioners have adopted various pass-through entity adjustment models to reconcile the value of pass-through entities relative to public companies. However, many of the pass-through models currently in use do not consider all of the tax burdens that may be included in the publicly derived equity risk premium. Following others, we review support for the notion that using public stock market returns to derive a cost-of-equit...","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128858605","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Implied Volatility and Volatility Smiles in Option-Pricing-Based Security and Business Valuations","authors":"E. Sundheim","doi":"10.5791/0882-2875-34.1.31","DOIUrl":"https://doi.org/10.5791/0882-2875-34.1.31","url":null,"abstract":"In estimating target companies' volatilities, practitioners typically consider the volatility of guideline public companies (GPCs). This paper discusses various methods for estimating GPC volatilities with a focus on implied volatilities and volatility smiles. The paper finds that implied volatilities are theoretically superior to volatilities calculated from historical data, although the usefulness of implied volatilities is often limited by the availability of option data.","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123787088","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Collars, Prepaid Forwards, and the DLOM: Volatility Is the Missing Link","authors":"J. Finnerty, Rachael W. Park","doi":"10.5791/0882-2875-34.1.24","DOIUrl":"https://doi.org/10.5791/0882-2875-34.1.24","url":null,"abstract":"The variable prepaid forward (VPF) model assumes that a marketability restriction only costs the asset owner the time value of money during the restriction period. It does not fit the definition of the marketability discount. A put-option model is better suited for the discount for lack of marketability (DLOM) calculation. The VPF model will usually significantly underestimate the DLOM, the more so the higher the asset's price volatility.","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122836326","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Letter to the Editor: Total Beta and the No Arbitrage Rule: Some Real-World Considerations","authors":"P. Butler, B. Dohmeyer","doi":"10.5791/0882-2875-34.1.2","DOIUrl":"https://doi.org/10.5791/0882-2875-34.1.2","url":null,"abstract":"","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122384949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"From the Chair of the Business Valuation Committee: Draft Reports, Oral Reports, Record Keeping, and USPAP","authors":"R. Morrison","doi":"10.5791/0882-2875-34.1.39","DOIUrl":"https://doi.org/10.5791/0882-2875-34.1.39","url":null,"abstract":"This letter ‘‘From the Chair’’ is admittedly rather lengthy, but it provides very important information and updates about the 2016–2017 edition of The Uniform Standards of Professional Appraisal Practice (USPAP) and about draft reports, oral reports, and record keeping. I understand that there was a debate at the annual AICPA forensic and valuation conference regarding whether forensic and valuation professionals providing litigation services could or should comply with USPAP’s record-keeping rule related to the retention of reports in the work file. No one from the Appraisal Standards Board (ASB) or anyone formerly associated with the ASB participated at that debate. I personally have seen this debate flare up on the various valuation and appraisal professional blogs on the internet. I also have a personal interest, not only as the chair of the Business Valuation Committee (BVC), but as an ASA that provides litigation services. I decided to do some research to educate myself further. USPAP is a product of the ASB of the Appraisal Foundation (TAF). The TAF was formed in the late 1980s by a consortium of appraisal and valuation professional organizations (including the ASA) in response to complaints about faulty appraisals during the ‘‘Savings and Loan’’ crisis. Therefore, the ASB created USPAP in order to ‘‘promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers.’’ The ASA was a founding sponsor and continues to be a sponsor of TAF. As a sponsor, the ASA agrees to hold its accredited members to USPAP. ASA is the only business valuation organization that requires its accredited members to comply with USPAP. Currently, USPAP is published every two years. The next issuance will be for 2016 and 2017. In advance of each new issue of USPAP, the ASB considers any updates it wishes to make to the document. Any such recommended updates are based upon requests from various stakeholders (i.e., not from TAF or ASB) and are disclosed to the public in exposure drafts and public meetings wherein the ASB solicits comments. On January 7, 2014, the ASB issued its First Exposure Draft of proposed changes for the 2016–2017 edition of USPAP (‘‘first draft’’). In the first draft, the ASB proposed, among other things, that it had ‘‘heard,’’ primarily from ‘‘enforcement officials,’’ concerns about the definition of report in USPAP and about the requirements in USPAP about the treatment of draft reports. ‘‘Report’’ is defined in the 2014–2015 edition of USPAP as ‘‘any communication, written or oral, of an appraisal or appraisal review that is transmitted to the client upon completion of an assignment’’ (emphasis added). The concerns were related to appraisers who may have developed multiple reports in an assignment and then could attempt to disavow responsibility for earlier iterations (some of which included signed appraiser certifications) because they were not transmitted to the client upon completion of an a","PeriodicalId":138737,"journal":{"name":"Business Valuation Review","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115368971","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}