My last post described an early promissory note valuation that provided me with an object lesson in humility. This post is the follow-up to show that it is possible to learn from such lessons and to lay the groundwork for future growth. The ending of this two-part series is happier than its beginning!
While working on the valuation of a series of promissory notes recently, I recalled a case involving my very first note valuation. It reminded me once again that if an appraiser (or any professional) desires an object lesson in humility, he or she just needs to look at a report (or other work product) prepared 30 (or 10, or even five) years ago.
The Reason. That’s why clients and prospects call professional service professionals, such as lawyers, accountants, financial planners, and yes, business appraisers. But when a client or prospect has a reason to seek out someone with your professional skills and experience, what is the Reason they should call you?
When I was a young business appraiser, or well, when I was a new but not so young business appraiser, the valuation of illiquid minority interests involved developing a base value for a business and then applying two big discounts, a minority interest discount (MID), and then, a marketability discount, aka DLOM. This post is about the first, now disappearing, minority interest discount.
Business owners and their advisers sometimes fixate on the multiples, usually of EBITDA, obtained in transactions. Normally, these are transactions involving other businesses and other owners. However, company owners and managers should focus on building the level, sustainability, and expected growth of their earnings to maximize the value of their businesses.
This week’s post is about a very recent statutory fair value case involving a real estate holding company in New York. The case settled, favorably for the plaintiff/shareholder, after opening arguments at the beginning of trial. The key business valuation question was that of the appropriate marketability discount in a New York fair value determination. All the arguments are shared and analyzed. If you were the holding company, would you have settled?
I’ve said many times that no formula agreement can be written that will provide reasonable valuation calculations over time under all circumstances involving a company, its industry, the national economy, conditions in the financial markets, and more. This week, I review the case, Roth v. United States, 511 F. Supp. 653 (E.D. Mo. 1981) and the appeal to make this point.
In May, I’ll be speaking at the AAML/BVR National Divorce Conference in Las Vegas. My topic is “How to Present Complex Finance to Judges.” Given that every divorce trial I’ve seen has been a bench trial, the topic focuses on judges. However, many of the same presentation techniques are certainly applicable to juries, as well.
The idea for this post is simple. I’m asking readers to provide me with examples of the best demonstratives they have seen to present complex financial and valuation issues in court. I’ll also be talking about concepts and ideas, so any thoughts regarding conceptual approaches or philosophical approaches to court testimony would also be helpful.
At the end of every year, I try to make time for introspection and thinking about the future. When the mind is open, many things are possible. Last night, while sleeping, I dreamed about priorities in a variety of ways. When I awoke, the thought at the forefront of my mind was: dream it, think it, and do it, now.