Business Valuation Update
- How to Review a Report’s Valuation Methodology
- Ideas for Solving Two Problems in the BV Profession
- How Do Your Firm’s Benefits Stack Up?
- Using Rule of Thumb Data to Uncover Cooked Books
Economic Obsolescence: An Adjustment That Is Often Overlooked
When we perform a business valuation, the valuer is constantly faced with addressing the highest and best use of a property, as well as different premises of value that can impact the conclusions. This article discusses an issue that arises regularly but is not necessarily addressed by the valuation analyst, namely economic obsolescence.
Indefinite Is Not Infinite—Solving a Dichotomy in Trademark Valuation
The valuation of an intangible asset is based on its useful life. For trademarks, appraisers regularly opt for an indefinite life, when no obvious factors exist that would limit the future economic life of the trademark. Almost all brands are however finite, and assuming indefiniteness can have two serious effects: one on value and one on accounting. The following article discusses such effects and suggests some guidelines and tools for how to analyse the life cycle of a brand and how to estimate its remaining useful life (RUL).
The Useful Life of Trademarks
Trademarks are often deemed indefinite simply because they can be continually renewed. However, almost no asset is imperishable, and the indefinite life assumption has serious consequences for the values ascribed to trademarks.
Economic Obsolescence: Determining Loss of Value Caused by External Factors
(Editor’s note: Economic obsolescence is a topic that deserves more attention than it has been given. While the phenomenon arises regularly, it is often overlooked in a valuation analysis. Also, there is scant information on it in the main business valuat ...
Economic Obsolescence: An Adjustment That Is Often Overlooked
When we perform a business valuation, the valuation analyst is constantly faced with addressing the highest and best use of a property, as well as different premises of value that can impact the conclusions. This article is intended to discuss an issue th ...
A Case Study of Valuing Distressed Assets in the Energy Sector
In 2015, oil prices plummeted from a high above $60 per barrel to below $40 per barrel. By late 2015, no one expected prices to return to the $80-to-$100-per-barrel level that was the norm over most of the last decade.
Takeaways From the Record-Breaking ASA New York Fair Value Conference
In-person capacity was sold out, and virtual attendance brought the total to about 300—a new attendance record—for the ASA Spring Fair Value Conference in New York City May 4. Topics included inflation impacts on valuation, audit targets, the new AICPA business combinations guide, ESG, PE valuations, and more.
Supplement: International Glossary of Business Valuation Terms Redlined Version
Download a sample redlined version of the International Glossary of Business Valuation Terms above.
Consider Laws and Regulations When Valuing Patient Records
In the highly nuanced area of healthcare valuation, questions often arise about whether patient medical records have any value independent of the medical practice (for example, as a stand-alone asset). Even before valuation analysts consider the rule that ...
Benchmark Data on Contract-Based Intangible Assets and Remaining Useful Lives
Many contract-based relationships represent identifiable intangible assets that require valuation apart from goodwill. The data here are from the third edition of Benchmarking Identifiable Intangibles and Their Useful Lives in Business Combinations, which includes data from almost 16,000 purchase price allocations.
Book Review: Best Practices: Thought Leadership in Valuation, Damages, and Transfer Price Analysis
A “gem” is what this reviewer calls a new book by Robert F. Reilly and Robert P. Schweihs of Willamette Management Associates.
Valuing Intangible Assets by the Cost Approach
The cost of any particular asset does not normally represent its fair value. But in practice, replacement cost of an asset adjusted for time to use establishes a ceiling for its fair value, as it is the maximum amount a prudent investor will pay. There ma ...
Indefinite Is Not Infinite —Solving a Dichotomy in Trademark Valuation
The valuation of an intangible asset is based on its useful life. For trademarks, appraisers regularly opt for an indefinite life, when no obvious factors exist that would limit the future economic life of the trademark. However, almost all brands are fin ...
Book Review: Understanding Business Valuation: A Practical Guide to Valuing Small to Medium Sized Businesses, 5th Edition
A valuation expert reviews the newest version of one of the leading business valuation texts, written by Gary Trugman.
10 Best Valuation Cases for 2015
Valuation plays a key role in most civil litigation. Appraisers testify in divorce cases, contract disputes, bankruptcy proceedings, statutory appraisal actions, patent litigation and a host of other suits. All of this activity produces a continuous stream of case law. But some cases are more impactful than others. Here are 10 cases that stood out in 2015.
Don’t Automatically Reject the Asset Approach for Going Concerns
Many valuation analysts immediately reject the asset-based approach for operating businesses, but this is a problem, say Robert Reilly and Weston Kirk, who are both with Willamette Management Associates. The method is rejected too often because analysts are not familiar enough with the asset approach or they have misconceptions about when (and when not) to apply it.
Highlights From the 2015 ASA Advanced BV Conference
Valuation experts hit the jackpot in Las Vegas at the annual Advanced Business Valuation conference of the American Society of Appraisers (ASA). The event had great sessions that offered some practical advice for a wide variety of valuation issues, from e ...
Goodwill Amortization Controversy and CEIV Highlight Fair Value in 2020
Mark Zyla (Zyla Valuation Advisors) gives some highlights of what’s on the front burner for fair value in 2020, including issues surrounding the FASB’s invitation to comment on the impairment of goodwill, an important update to the Certified in Entity and Intangibles Valuation (CEIV) credential, the increasing globalization of the profession, and upcoming guidance.
A primer on hospital valuations
We are publishing this article on hospital valuation in two parts. The first part of the article gives you background on hospital valuation and discusses trends. The second part of the article, which ...
Quantitative or Qualitative Impairment Test? for Indefinite-Lived Intangible Assets? You Choose
The cost and complexity of performing a quantitative impairment test for indefinite-lived intangible assets has long been a concern for financial statement preparers. To address their feedback and to create consistency with accounting standards on testing ...
Key Issues in Debate Over the Cost Approach for Healthcare Intangibles
Editor’s Note: There is an ongoing debate over the reliance on the cost approach in valuing intangible assets in a healthcare industry context. Adding fuel to the fire is an AICPA white paper on the application of the cost approach to valuing intangibles ...
Mastering the Art of Valuing Master Limited Partnerships
Master limited partnerships (MLPs) have emerged from the recent economic turmoil as one of the strongest asset classes for retail as well as private equity investors. In 2010, for example, the Cushing 30 MLP Index delivered a 42% total return, outperformi ...
Key Questions to Help IP Analysts Choose the Right Valuation Method
For intellectual property (IP) valuation analysts, matching the approach to the assignment is crucial to generating credible results. Often, cost and market approaches will both fail to account with any measure of precision or defensibility of the value t ...
CPT® Codes Drive Compensation, Business Valuation, and Regulatory Compliance in Healthcare
“Know them or practice at your peril,” says the author, who maintains that you cannot understand Stark Law requirements without understanding the CPT® codes for the particular medical specialty you are engaged to value.
BVU News and Trends February 2018
A monthly roundup of key developments of interest to business valuation experts.