Timeless Wisdom
I recently read a post on Chad Barr’s blog, Timeless Wisdom to Unlock and Thrive, that offered up some short and timeless nuggets of wisdom for those of us in the professional services world – and elsewhere, as well.
The Basis for Control Premiums
Control/Lack Thereof or Expected Cash Flow, Growth, and Risk?
My co-author, Travis W. Harms, CFA, CPA/ABV, and I have been doggedly insisting that business valuation questions, issues, premiums, discounts, and more be viewed through the combined lens of expected cash flow, its expected growth, and the risks associated with achieving the expected cash flows.
Until the latter 1990s, it was thought that buyers of companies paid premiums (over publicly-traded prices of targets) for elements of control. The current view is that buyers of companies pay for expected changes, post-acquisition, in combined cash flows and potentially reduced risk. Unfortunately, the valuation literature appears slow to recognize this change in thinking from paying for control (or lack thereof) to paying for relevant value based on the expected cash flows of a business or an interest in a business from the viewpoints of market participants at the respective levels.
3 1/2 Years, 182 Weeks, and 1,278 Days of Walking
And, of course, Pickleball!
Three and one-half years ago, I started a walking journey that continues through today. This post talks a bit about that journey, which has included playing pickleball as an essential part, and the impact it has had on me. At the end, it offers a way to think about starting a walking program of your own.
Silicon Valley Bank’s Failure: Lessons for Private Business Owners and Directors
The failure of Silicon Valley Bank will be talked about for years. What really happened? What caused SVB to fail? Was it just the long-term Treasury securities that everyone has talked about? Well, no. SVB was on a self-imposed path to destruction that had been waiting for an adverse change in the economy or a rising interest rate environment to kick it into oblivion.
There are, indeed, lessons for family business directors from the failure of Silicon Valley Bank. In this week’s post, I discuss four.
A Change in Walking Goals: Weekly or Daily?
For years I have set a daily goal of walking five miles per day that has set me up for occasional “failure.” I have recently reset the the goal to 35 miles per week. This subtle change has no impact on my overall walking, but makes for more satisfying weeks, even if I fall short for a day. I can almost always reach the weekly goal now that I’m focused on it.
If you are walking with a daily goal, consider changing that goal to a weekly goal. And if you are thinking about starting a walking program, think about setting your initial goal on a weekly basis. We all want to “succeed” in reaching our goals, and this subtle change – from daily to weekly – helps assure ongoing success.
No Marketability Discounts or Discounts for Illiquidity for Controlling Interests of Companies
This post examines two concepts, marketability and liquidity, or the lack of one or both in the context of fair market value determinations of controlling ownership interests of private companies.
Fair Market Value and the Nonexistent Marketability Discount for Controlling Interests
This post provides a discussion of several implications of the definition of the standard of value known as fair market value. We focus first on the definition of fair market value. Next, we examine the hypothetical negotiations conducted by hypothetical buyers and sellers in fair market value determinations and the implications of those negotiations.
We then look at the implications for the so-called “marketability discount for controlling interests.” We look at this “discount” from the vantage points of the definition of fair market value, the integrated theory of business valuation, and recurring and incorrect rationales for the discount.
Another Post on Walking
Today marks the 1,175th day of a walking program that began well more than three years ago. I thought I would miss my 5 mile goal yesterday because of a lower back issue, but somehow worked through it. It would have stopped a 258 day streak. I am so grateful to be able to move regularly, and encourage all to do the same – at whatever activity seems appropriate.
75 Years of Chris Mercer
In this post, I reflect a bit on the day of my 75th birthday. It was a great day personally, and a great day at the office. I was told not to leave the office early and to act surprised. I didn’t have to act surprised because I was very surprised and happy to be surprised.
It’s Not Too Late to Subscribe to the National Economic Review
A New Issue Is Soon To Be Released
Are you a business appraiser or other professional looking for a comprehensive resource to keep you informed on the major factors affecting the U.S. economy and one you can include in your work product? Look no further than National Economic Review. It was, and remains, the only regularly published economic review that is written by valuation analysts for valuation analysts. As a bonus when subscribing, you get access to almost 40 years of historical issues. Learn more about the National Economic Review and how to subscribe in this post.