In a post last week, I wrote about appraisal review, indicating that this important topic would be a new focus for ChrisMercer.net. In that post, I addressed appraisal review, not as something mechanical that appraisers do, but much more broadly. With this post, we begin to look at the standard of value of fair market value through the lens of appraisal review.
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.
From December 15, 2019 until now, it has been just over two years. I’ve been walking with intentionality these past two years. Miles, 4,552. Steps, 9.6 million. Health, as far as I know, is better. Attitude, much better. This post recaps the experience of the last two years and offers a few thoughts that I hope you find either interesting, helpful or both.
For the first time in 215 days I walked less than 5 miles, and only the 5th time in the last 671 days. My body was willing, but my spirit needed some relief. In this post I discuss the importance of focusing on the habit of exercise rather than the string of activity.
The thought came to my mind on my walk this morning. It was undoubtedly prompted by meetings over the years with younger analysts who, because they wanted to find “perfect” answers to valuation problems, were (temporarily) unable to find any answer at all.
Excellence is attainable for many, if not most, at least in some areas of life. Perfection is unattainable. The pursuit of excellence is the roadway to success. The pursuit of perfection is a downward slide to failure.
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.
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.
A question was posed in a recent issue of Business Valuation Update from BV Resources. Paraphrasing, if all shareholders are minority, should there be a discount for lack of control (from the marketable minority level)? The broader question is, whether all shareholders are minority or there is a controlling shareholder, should there be a discount for lack of control (from the marketable minority level)? The answer is the same as we conclude in this post.
BV Resources recently published a DLOM Survey. It had 10 questions and 202 responders. This post looks at several of the questions to infer the current state of the art in valuation regarding DLOMs. The post is longer than most but is worth your investment of time to read it and hopefully comment since the issue is key in all valuations of illiquid minority interests of companies.
A recent case in the Court of Appeals of Indiana focused on a misunderstood valuation issue, the so-called “marketability discount applicable to a controlling interest” in a company. In this post we take a look at the case and place the so-called discount in a new light.
