3
Date: Thursday, August 3, 2017
Time:
10:00am-11:40am PT / 1:00pm-2:40pm ET
Format: A BVR Webinar

Earn 2 CPE credits
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Featuring  (click image for more information)

Dan Pannese
CPA/ABV/CFF, CVA, CSEP, MST
Sacred Heart University
Edward Pratesi
CPA/ABV, ASA, CM&AA, CVA
UHY Advisors

About This Program

Whether in the form of the holding of publicly traded securities or other asset classes (art, real estate, personal property), significant blocks of these assets may upset the balance in their respective markets, leading to an inability to transact all in a day or reasonable time period. Blockage discounts are discussed primarily for stock holdings, whereas an absorption discount is typically applied to real estate, art and personal property. Join experts Ed Pratesi and Dan Pannese as they cover the history and the IRS’s position on these adjustments as well as present criteria to consider in the determination of blockage or absorption discounts. Court cases are cited highlighting the decision making process, as well as case studies to make sure you have practical guidance for your next assignment.

Agenda

  • What is a blockage discount?
    • Blockage discount — an amount or percentage deducted from the current market price of a publicly traded stock to reflect the decrease in the per share value of a block of stock that is of a size
    • Publicly traded stocks
    • Real estate
    • Art
    • Books, manuscripts, and animal trophies
  • Blockage vs. absorption
  • Does it apply to closely-held companies?
  • IRS history of blockage discounts
  • History of blockage discounts
  • So what is a reasonable time?
  • What is fair market value?
  • The definition provides for both a willing seller and a willing buyer…..
  • Factors influencing discount
    • Number of shares in the block compared to total O/s shares
    • Number of shares in block compared to daily/weekly/monthly trading volume
    • Volatility of the stock price
    • Impact on price based on increased volume
  • Factors influencing discount
  • Methods of determining discounts
    • Percentage approach
    • Comparable sale
    • Secondary market offering
    • Company redemption
    • Private placement
    • Dribble-out
  • Two approaches:
    • Hedging by use of put options
    • DCF analysis

Learning Objectives

  • Understand the definitions and differences between blockage and absorption discounts
  • Summarize legal cases involving both types of discounts
  • Explain the methods used to determine adjustments to value

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CPE Information

Prerequisites: Knowledge of Business Valuation
Program Level: Advanced
Preparation Required: None
Delivery Method: Group Internet-Based
Recommended CPE: 2 Credit Hours (Specialized Knowledge & Applications)


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