May 18th will be a fun day at the 2015 NYSCPA Business Valuation Conference. I’ll be talking on a panel with Peter Mahler, Justice Scheinkman, and Sam Rosenfarb on New York Statutory Fair Value Issues, or corporate divorce. Peter is the author of the New York Corporate Divorce Blog, Justice Scheinkman will bring the voice of an experienced jurist the panel, and Sam will be the referee.
I’ll also be speaking on the same day about Unlocking Private Company Wealth. As a bonus, I’ll get to have dinner the night before with my son, Zeno, who lives in New York City.
We have been talking about managing private company wealth in numerous posts on this blog and in my forthcoming book, Unlocking Private Company Wealth: Proven Strategies for Managing the Wealth in Your Private Business. To facilitate this discussion, we need to have an understanding about how different valuation concepts enter into the process of ownership […]
Overview of a Two Part Series Morgan Stanley and Citigroup entered into a joint venture (JV) dated as of May 31, 2009, with Morgan Stanley owning 51% and Citigroup owning the remaining 49% of the common member interests in Morgan Stanley Smith Barney Holdings LLC (“MSSBH”). The JV was evidenced by the Amended and Restated […]
Differences in standards of value between appraisers (yes, it happens), or differences in interpretation of what a particular standard of value means, can create enormous and seemingly irreconcilable differences in conclusions.
My advice as to the appropriate consideration of embedded capital gains for tax pass-through entities is that appraisers should not tax affect the gains in valuations for buy-sell agreements. You should discuss this issue with your tax advisor and let him or her walk you through examples of what happens to buyers or sellers under varying assumptions about embedded gains.
What I have learned over the past 30+ years in this emerging valuation profession is that it is almost always (I never say always) a good idea to look at valuation questions, issues, and facts in terms of the implications for expected cash flows, expected growth of the cash flows, and the risks associated with the expected cash flows. It is certainly almost always a good idea to examine valuation in light of present value concepts.
Following “Mercer’s Musings” 1-3, Mercer’s Musing #4 examines the guidance found in “Procedural Guideline -2 (PG – 2) Valuation of Partial Ownership Interests” in the ASA Business Valuation Standards. Procedural Guidelines (PG) are designed to provide more detailed guidance for consideration by business appraisers than found in the base standards themselves.
There is a great deal more to valuing illiquid minority interests than “guessing” at a marketability discount based on vague references to dated and non-comparable restricted stock transactions or studies. All appraisers would be well-served to read PG – 2 Valuation of Partial Ownership Interests in the ASA Business Valuation Standards. Doing so should provide a different and more realistic view of the valuation of illiquid minority interests of private companies than is held by many appraisers.
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.
Business valuation is all about expectations for the future. However, those expectations, as reflected in forecasts prepared for business appraisals, must be realistic. This short post mentions the hockey-stick projections often seen in business appraisals and ask for realistic projections, whether they be explicit forecasts of future years’ performance, or implied forecasts in single-period income capitalization methods.
While I have always focused on trying to make presentations for judges as understandable as possible, I have been thinking about this topic a good bit during the past year. By the time the year is over, I will have spoken on this topic of simplifying complex financial information for judges and juries a number of times around the country. Sometimes, it is a single graphic that helps convey the reasonableness of a complex series of opinions. This post is about one such graphic.
