The capitalization of earnings method is an approach acknowledged by the IRS that converts a single income data point to an indication of value. It can be applied to historical, current, or expected income, as represented by earnings, EBIT, EBITDA, … Continue reading
A few comments for our valuation review brethren out there – first off, I understand you. You have a stack of 50 reports you need to review, you are being torn to pieces by your documentation requirements, yet are pushed … Continue reading
Due to the fact that the fair value standards and their applications are evolving, especially in the realm of level 3 measurements, we find in audit reviews that valuation reviewers have differing opinions on a variety of specific applications, which … Continue reading
I had two interesting engagements recently wherein I was asked to value variable executive equity compensation. One of the projects was for tax/fair market value purposes, and the other was for financial reporting, to determine the contingent liability associated with … Continue reading
We all know private companies are generally more volatile than their publicly traded counterparts. That assumption almost always holds true, except in the case of some thinly traded public companies. So how can we reconcile using volatility calculations derived from … Continue reading
A while back, we faced a hiccup in the audit review process on two of our valuation reports for a client. The valuation review team at [Big 4] took issue with our treatment of options on common stock. Specifically, [Big … Continue reading
It seems lately that there has been quite a bit of attention being paid to tiered entities. This is an interest in an entity is held by another entity, and the interest in that entity is the one that is … Continue reading
We’ve seen a couple of cases recently where a controlling interest in a target company was acquired along with some provision for future acquisition. The most recent example contemplated an option for the buyer to purchase the remaining non‐controlling interest, … Continue reading
It seems like we’re getting more and more questions from valuation reviewers on issues relating to projections for assignments related to intangible assets and goodwill. To me, this makes complete sense, given the fact that almost all intangible assets (aside … Continue reading
I’ve been told by some old timers that the valuation business is almost perfectly hedged. What I mean by that is there is always some niche within the profession that is experiencing growth while others may be contracting. During the … Continue reading