After a break of more than two months, I’m back to ChrisMercer.net. This blog and its predecessors has been the beginning point of exposure for most of my thinking for many years. With this post, we turn to a new primary topic of focus — appraisal review. As you will see, there is a great deal more to the concept of appraisal review than a few methods or techniques to be employed. I’m looking forward to the coming exploration of appraisal review.
This post puts benchmarking analysis using averages of restricted stock studies to determine marketability discounts to the test and the test is failed. If cannot work for even a simple, single asset holding company interest. Read the post and you will not employ simple benchmark analysis again. The post is necessarily long. Print it off or bookmark it when you have time to read it and think about its implications.
If you even occasionally sign a Form 8283 for a donor/client who has made a gift of closely held business interests, it is probably a good idea to know what you are signing. This post provides an overview of the “rules” of the charitable gifting game from an appraiser’s perspective.
The Wall Street Journal recently featured an article about the AICPA’s move to open up its ABV credential to non-CPAs. This article caused me to think about the significance of the AICPA’s new position for business valuation.
When most people think about buy-sell agreements, they think about shareholders and companies entering into agreements. However, corporations also enter into buy-sell agreements.
One day a number of years ago, I received a call from an attorney. On that initial call, he told me about a bizarre buy-sell agreement process that was underway. The attorney represented a company. Based on a buy-sell agreement of some age, an option provided by the agreement had been triggered, and one of the companies had the right to acquire the company at its fair market value.
We celebrate the 20th anniversary of the Quantitative Marketability Discount Model (QMDM) in this post.
Over the years, I have been called upon to review the work of other appraisers and damages experts. To a certain extent, the requirements for appraisal review come with the territory of being an expert witness. Appraisers for a side in litigation are often asked to review the work of the opposing expert. In the […]
Quantifying Marketability Discounts Companion, Version 4.0
Format: ZIP File (PDF and Excel Model)
Price: $125.00
Publication Date: 2008
Buy Now
The very latest version of the Quantitative Marketability Discount Model (QMDM) now includes a revised and expanded explanatory manual, delivered as a .zip file electronically via email.
This rate-of-return based model, the QMDM, provides the appraiser with a tool to relate the marketability discount to the specific facts and circumstances of the subject company. The QMDM is superior to traditional benchmark analysis and to the more detailed use of restricted stock studies since it specifically identifies the economic benefits expected by hypothetical willing buyers (and sellers), and applies basic present value analysis to well-defined parameters.
In addition, rate-of-return models, such as the QMDM, are the tools that satisfy the requirements of USPAP.
The QMDM presents a practical model to assist business appraisers in developing, quantifying and defending marketability discounts under the income approach. The model allows you to quickly and easily quantify marketability discounts in the appraisal of minority business interests.
Included in the QMDM Companion, Version 4.0:
- Revised and expanded explanatory text, excerpted from Business Valuation: An Integrated Theory, Second Edition
- A spreadsheet presentation of the QMDM which will walk you through the model’s assumptions and assist in developing your valuation rationale based on factors specific to your client.
- A special “test” section of the QMDM will allow you to easily test sensitivity to changes in key assumptions.
- Provides you with an analysis that is ready to print or import directly into your valuation report.
There are fewer than 150 words in the Purchase Price Section quoted above. I have written about 2,400 words talking about the nuances in the paragraph. If I can do this while only thinking about it, consider what the parties might do following a trigger event, particularly if the financial stakes are high.
