February 28th, 2006
Issue #  41-2

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The BV E-Update is your complimentary source for the latest valuation court cases, plus timeless tips, information, and definitions.

Telephone Conference

March 9, 2006 Telephone Conference:

Marketing Your Business Valuation Firm - Keys to Building Business

Featuring Barbara Walters Price (Moderator)
Nancy Fannon , Harold Martin , and Chris Mercer

BV is a hot-growth niche with a unique marketing challenge—transforming those one-time engagements into repeat business. This teleconference will reveal the keys to building your BV business and getting your phone to ring—again and again—with real prospects.

Barbara Walters Price, SVP of Marketing at Mercer Capital, and her panel will provide “how-to” insights into growing your firm. Learn from these experts how to:

  • Identify your industry strengths and pinpoint your market in order to increase your marketing effectiveness
  • Cross-sell in your firm since partners can be the best source of leads
  • Make a simple, actionable marketing plan, appropriately budgeted to help you increase business.
  • Use tools-of-the-trade to attract business valuation clients, including web sites, newsletters, speaking engagements and articles, and hiring a marketing director

Thursday, March 9, 2006
10:00am-11:40am PST/11:00-12:40MT/12:00-1:40CST/1:00-2:40EST

More information on current and future telephone conferences is available at www.BVResources.com /Conferences


New Court Cases

    • W.G. Anderson, et al. v. United States, 2005 U.S. Dist. LEXIS 39573 (December 28, 2005)
    • Robertson v U.S., 2006 U.S. Dist. Lexis 1167 (January 13, 2006)
    • In re Winstar Communication, Inc., et al., Case No. 01-1430, United States Bankruptcy Court (December 21, 2005)
    • In re Comdisco, Inc., 2006 U.S. App. LEXIS 1027 (December 5, 2005)
    • Schiro v. Schiro, 2005 Mich. App. LEXIS 2085 (August 25, 2005)
    • Diesel Machinery Inc. v. B.R. Lee Industries, Inc., 2005 U.S. App. LEXIS 16421 (August 8, 2005)
    • Keach v. U.S. Trust Co., 2005 U.S. App. LEXIS 17355 (August 17, 2005)
    • In re Marriage of Haefele, 2006 Minn. App. Unpub. LEXIS 51 (January 17, 2006)

    New! Click here for your complimentary copy of the case abstract for W.G. Anderson v. U.S.


These cases and more are available to subscribers to the BVLaw database at BVLibrary.com . Abstracts will be available in an upcoming issue of Business Valuation Update® at BVLibrary.com

Reader Editor Exchange

How reliable is any rule-of-thumb for valuing goodwill in a professional practice?

Many analysts have seen the “three-times” multiple in valuing goodwill: what is the foundation for this?

Answer: The real question may be: what’s the value of any rule-of-thumb? Probably the best and maybe the only one that is truly valuable may be the standard for valuing accounting practices, and that’s simply one times gross revenues—but even that one is based on hundreds and hundreds of actual transactions. And that may be more of a self-fulfilling prophecy. But frankly, to apply any industry formula or rule of thumb blindly is a big mistake. All analysts get calls from people wanting them to value a company in 30 seconds based on a rule of thumb, without considering the nuances of a particular case. But you could turn the question around, and ask “is the capitalization rate of 33 percent to capitalize excess earnings reasonable?” And from a reasonable standpoint, that could work in certain situations. The fact that it’s higher than the typical capitalization rate we’d use for a company makes sense, depending on the circumstances.

Kevin Yeanoplos, CPA/ABV (Breuggman and Johnson, P.C., Seattle)

Source: January 18, 2006 teleconference, “Calculating Goodwill: What is Personal and What is Professional?” Copies of the conference and transcripts available at www.bvresouces.com


BVMarketData Update

The 4th Quarter 2005 update to the Mergerstat® / Shannon Pratt's Control Premium Study™ has now been posted online. 150 new transactions and the corresponding summary document have been posted to this database. The Mergerstat® / Shannon Pratt's Control Premium Study™ contains transaction details on over 4,860 public companies with a median revenue of $92 million.

These databases and more are available at BVMarketdata.com


BV Definition of the Week

Equity Risk Premium

“Rate in excess of a risk-free rate to compensate and otherwise persuade an investor to invest in instruments with a higher degree of probably incurred risk.”

Source: Pratt, Reilly and Schweihs, Valuing a Business, 4th edition.


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