While community banks may be insulated from certain more onerous stress testing and capital expectations placed upon larger financial institutions, recent regulatory guidance suggests that community banks should be developing and implementing some form of stress testing and/or scenario analyses.
The Quantitative Marketability Discount Model is a shareholder-level discounted cash flow model designed to help valuation experts derive and explain a reasonable and transparent conclusion based upon the facts and circumstances of each case. For information on the model, download … Continued
One critical part of the valuation process is the management interview or, as it is sometimes called, the due diligence visit. The management interview provides the business appraiser with an opportunity to integrate many sources of information about a business into a logical and consistent whole. The interview also helps to complete an overall understanding of how a particular business operates. The process of preparing for and conducting a management interview requires the appraiser to develop a command of the facts and circumstances of this particular valuation case.
Business appraisers retained pursuant to the operation of buy-sell agreements are normally bound to prepare their valuations in accordance with the kind of value described or defined within the agreements. Confusion over an appraiser’s basis of value, either by appraisers or by users of appraisal reports, can lead to the placing of inappropriately high or low values for a buy-sell agreement transaction. Therefore, it is essential that business appraisers and the parties using appraisals are aware of the correct basis (level) of value.
This article summarizes Mr. Rodgin Cohen’s presentation at the 2012 AICPA Conference on Banks and Thrifts on the range of complex issues affecting the banking industry.
A fairness opinion is provided by an independent financial advisor to the board of directors of selling companies in many transactions today, especially those with a significant number of minority shareholders.
Business appraisers provide support to attorneys working on cases involving valuation and business damages.
A “top 10” list of things every estate planner should know about business valuation & list of helpful resources.
When talking with business owners about transacting their business, an issue that almost always arises relates to the appropriate deal and financial expertise of the transaction advisor.
In April 1999, the Tax Court issued a decision authored by Judge David Laro in Alice Friedlander Kaufman v. Commissioner.
Family limited partnerships have become an increasingly popular estate planning tool.
As the use of fair value measurement has expanded, so has the need for professionals who have specialized capabilities related to the measurement of fair value and the resolution of fair value issues.
Recognition of the particular attributes of independent trust companies is significant to understanding their value.
For those banks considering the acquisition of a failed bank, changes to the terms of a number of FDIC-assisted transactions announced in the second quarter of 2010 should be considered prior to the preparation of bids.
If your business is structured as a C corporation, it might be well past time for you to investigate conversion to an S corporation status. This article lists the pros and cons.
The Tax Court Memorandum demonstrated that the Court thoroughly studied and it appears well understood the QMDM. While the Court did not accept the expert’s 65.77% discount, the Court criticized the assumptions used, not the QMDM.
The quoted unit price of a publicly traded security is sometimes not definitive of fair market value for a specific block of the shares or bonds. Such a condition typically arises when the subject holding has impaired marketability.
The world of fair market value is not the real world. It is a special world in which the participants are expected (defined) to act in specific and predictable ways.
A review of the 1993 paper “Market Discounts and Shareholder Gains for Placing Private Equity” by Michael Hertzel and Richard L. Smith.
A new form of business organization, the limited liability company (LLC), could present new planning opportunities for business owners.
Valuing a limited partnership interest can be complicated and time consuming. Whatever the level of complexity, careful documentation of the valuation process will benefit users of limited partnerships.
Since we are dealing with limited partnership interests, and since what can be transferred in most instances is only an assignee interest, shouldn’t there be a further discount applicable to the assignee interest?
As part of the appraisal due diligence process, information is obtained from general partners and/or managing members as well as from a variety of other sources. Such information provides a basis for the appraiser to understand the composition, operations, strategy, and governance of the entity. This article focuses on the importance of analyzing, from a valuation perspective, the reasonableness of this information.
The alternate valuation date warrants serious consideration at any time, but particularly in the current economic environment.