January 17, 2007 | www.BVResources.com | Issue 52-3

Everything you’ve always wanted to know about BV…

…And now all you have to do is ask: We’ve just launched the *updated* BVPapers™, the most comprehensive site for all your valuation research needs. The searchable database contains thousands of pages of BV-specific studies, conference presentations, legal abstracts, valuation reports, and more. New and noteworthy additions include:

  • Expert presentations and speakers’ materials from the most recent (2006) national and international BV conferences, including AICPA and CICBV;
  • Copies of the expert valuation reports used by both the taxpayer and the IRS in the landmark Kohler v. Commissioner (Tax Court, July 2006);
  • Latest court case abstracts, summarizing key valuation issues and decisions;
  • “Pullout” sections from BVR’s Special Guides and Reports—including our top-seller, BVR’s Guide to DLOM Case Law;
  • Transcripts of BVR’s telephone conferences and related presentations and reading materials.

Here's just a sampling of what to expect from the new and improved BVPapers: A paper and accompanying PowerPoint presentation, “Private Equity Groups: What Do They Look For?” by Owen Johnson, from the AICPA National BV Conference (December 2006). Or also from the AICPA conference, an article by Jay Fishman, “Fair Value in Dissenting and Oppressed Shareholder Matters: How to Avoid Minefields.” Or still another—Bill Black's, “Valuing Professional Practices—Thorny Challenges,” originally presented at the June 2006 IBA Symposium, and updated for posting in BVPapers to include subsequent USPAP changes.

Click here to visit the database and get a free download of Johnson’s Private Equity article and presentation.

FASB issues ITC on valuation standards

Yesterday the Financial Accounting Standards Board (FASB) issued its long-awaited Invitation to Comment (ITC) on the need—if any—for specific valuation standards within fair value accounting and financial reporting. The Board is soliciting views from all interested parties about the need for additional standards as well as what organizations should be involved in the standard-setting process; what organizational structure should be utilized to establish valuation standards; and what other potential issues may exist. The ITC includes specific questions on which the Board would like feedback.

The ITC is available at www.fasb.org; written comments are due tax day—April 15, 2007. The Board will also be holding a public roundtable in April to discuss the issues raised by the ITC; for more information, contact Paul Beswick at pabeswick@fasb.org.

AICPA just posted comments on Valuation Standards

The comment period on the AICPA’s proposed Statement on Standards for Valuation Services expired last month, and the Institute is now hard at work reviewing feedback from numerous organizations and individuals. Of particular concern are the provisions regarding use of third-party specialists (see highlighted item in BVWire# 51-1).

“This is an area where there will be modification,” confirmed Cindy Collier (Valuation Solutions) at the LEI National CLE Conference in Snowmass earlier this month. “We asked specifically for comments to the area and we’re working through them.” To review the 110 submissions on the Standards, just posted at the AICPA/BVFLS site, click here.

The Institute is still targeting July as the effective date for the Standards. “Check the AICPA web site,” Collier suggests. “There’s a lot of new information going up on a regular basis, on the standards as well as industry and professional updates.”

And for a discussion of all the provisions, predicted impact, and possible areas of conflict—tune into BVR’s telephone conference on BV Standards: AICPA, IRS and Beyond—Where Are We Headed?, featuring Ron Seigneur, Jay Fishman, Ed Dupke, and Tom Hilton, on January 25th. To register, click here.

More from FASB: Expected effective date for SFAS 141(R)

As reported in BVWire #49-2, FASB postponed the effective date for SFAS 141(R), Business Combinations: Applying the Acquisition Method, and during last week’s BVR telephone conference on SFAS 157 (Fair Value Measurements), the question came up regarding the current approval status of 141(R).

“My best information is that the Board is shooting for a June rollout,” answered moderator Al King. “They are under pressure from IASB (International Accounting Standards Board) to ‘converge,’ and IASB has some sort of internal deadline relating to the effective dates of their new Standards. But as I mentioned [during the telephone conference], in thirty-three years, the FASB has never met one of their own timetables,” King cautions, “so we will see.”

For a full transcript or CD of the SFAS 157 conference—during which panelists Jim Travis and Matt Crow join King to discuss the “down-the-rabbit-hole” adventures of fair value accounting, click here.

IRS also concerned about reasonable compensation data

In response to our item last week on the use of data sources in reasonable compensation cases, we heard from Robin Ruegg, an Engineering Manager for the IRS in Bloomington, MN. Ruegg points out that in her opinion, salary surveys are “always a problem to some extent,” as “you want the data to match as closely as possible with the facts in the case.” Ultimately, “you’d hope the surveys validate other approaches to compensation.” Ruegg references a recent S Corporation “under-compensation” case, in which the judge adopted the conclusions advanced by the IRS expert. For a copy of J.D. & Associates v. United States (U.S. District Court, Southeastern District of N.D., June 2006), click here.

New source for BV practice, education, marketing tools

Check out the new “Build a Valuation Practice” program from Mel Abraham, one of the more respected professionals in the BV community, available at www.BuildAValuationPractice.com. This integrated, multi-media program is offered in two formats—online as well as a CD/guidebook—and provides a “results-focused, tools-oriented approach to building a valuation practice from someone who has done it a number of times—and not just from a theoretical perspective,” Abraham says. “It is simply my way of providing the lessons I have learned from the road I have traveled over the past decade or more, to help those in our industry grow.” Abraham also offers educational programs, which supplement the training that credentialed analysts have already received from professional organizations, conferences and seminars; visit www.learnvaluation.com and www.FLPvaluation.com.

Copies of VC Financial Analysis still available

In response to our recent query, author James Plummer, Ph.D. (QED Research, Inc.) reported that his 1989 seminal study Venture Capital Financial Analysis is still available for $100 a copy—a substantial discount from the original $295. Contact the author directly at his website, www.QEDresearch.biz; limited quantities available.

Will the private equity boom go bust?

A new article from the Wharton School questions when the PE bubble will burst. “Private equity investors of all types [are] flush with cash,” say the UPenn authors, who also pointed out that in 2006, nearly a third of the dollar value of all U.S. acquisitions involved PE firms. But, “concerns about the sector’s ability to deliver sizeable returns are also welling up.” Flashbacks to the high-tech boom that went bust in 2000 are raising red flags among investors as well as industry analysts.

To read the full Wharton report, click here.


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