BVR Logo April 15, 2020 | Issue #211-3

BVWire is your go-to source for the latest in the business valuation profession. Highlights for this week include:

What family law practitioners need to know about COVID-19-related legislation

In a recent webinar, hosted by the American Academy of Matrimonial Lawyers (AAML), high-caliber presenters examined provisions in the mammoth COVID-19 federal legislation that are of particular significance to family law practitioners (attorneys and business valuators).

The discussion took place on April 9, and the speakers were Michelle F. Gallagher (Adamy Valuations), a nationally recognized BV expert, and Brian C. Vertz (Pollock Begg), a divorce attorney specializing in complex child support issues, business valuations, and other divorce-related issues.

No double dipping: In broad strokes, the Families First Coronavirus Response Act (FFCRA) provides emergency paid-leave benefits for employees who work for an employer that has fewer than 500 employees and who are unable to work because they are sick with the virus, care for someone with COVID-19, are in quarantine or self-isolation, or have children who cannot go to school because of mandatory school closures.

Employers affected by the employee’s absence may apply for refundable tax credits (from payroll taxes) to offset the cost of this extra paid leave. The FFCRA provisions apply to wages paid beginning April 1, 2020, and ending on Dec. 31, 2020.

Specifically, if an employee cannot work because he or she has COVID-19, the employer may get a refundable credit at the employee’s regular pay, up to $511 per day, for a total of 10 days. For other employees, including those caring for someone with the disease, an employer can claim up to $200 per day for up to 10 days. Gallagher notes that the IRS is still working on the forms an employer has to submit to get reimbursed.

The CARES Act includes an employee retention credit provision that says an employer may qualify for a refundable tax credit of up to $5,000 for each employee’s wages paid from March 13, 2020, through Dec. 31, 2020. To be eligible, an employer’s operations must have been fully or partially suspended because of the crisis by a shutdown order from a governmental entity or because gross receipts dropped by more than 50% in comparison to the same quarter in 2019.

Michelle Gallagher points out that there is no double dipping in the sense that, if an employer uses wages to qualify under the FFCRA, it cannot also use the same wages to secure benefits under another provision, i.e., the employee retention credit.

Employers struggling to pay employees and stay in business may be eligible for SBA loans that may be forgiven in part or even entirely. Under the paycheck protection program (PPP), smaller businesses (those with less than 500 employees), sole proprietors, independent contractors, and self-employed workers may apply. The SBA will forgive loans if the employer keeps the same headcount of workers and wages for eight weeks after disbursement of the loan. For full forgiveness, only about 25% of operating costs may go to nonpayroll costs, including rent. Under recent SBA guidance, lenders must disburse the loan proceeds within 10 days of loan approval. The eight-week count for the employer begins with the first disbursement of the loan.

Gallagher notes there is also no double dipping as concerns the PPP loan. An employer who wants to take advantage of the loan cannot also receive an employee retention credit.

Valuation considerations: Both speakers note that it’s important to consider the impact of the various remedies available to business owners and individuals in a business valuation or in calculating income for spousal support purposes for divorce purposes. Find out what the effect of the crisis has been on cash flow and what legal remedies a business has taken advantage of. Consider whether the PPP loan might be a windfall for the business owner. Consider the valuation date, Gallagher says. If, in an ongoing case, the most recent valuation was for Dec. 31, 2019, it may make sense to alert the attorney on the case to explore the possibility of doing an updated valuation. Note that different states have different valuation date requirements (date of separation, date of trial), but that courts, in this extraordinary situation, may allow for an updated valuation (which means more work for the valuator).

Extra: On the PPP loans, the SBA just issued FAQs, which you can access by clicking here. Don’t forget to sign up for the AAML/BVR national divorce conference, September 10-12. Click here for registration information.

IRS update on how to file carryback refund applications

In a recent ABA webinar including IRS representatives, new practical information related to the carryback provisions in the recently passed CARES Act emerged. Here’s a quick update.

The CARES Act represents an effort by Congress and the U.S. Department of Treasury to make available additional cash flow and ensure liquidity. The Act’s carryback provision temporarily repeals the 80% of taxable income limitation on using the net operating loss (NOL) carryovers that the 2017 TCJA imposed. Specifically, for a taxable year beginning before Jan. 1, 2021, a taxpayer can fully offset taxable income in that year with NOLs from prior taxable years. Also, taxpayers may carry back NOLs arising in 2018, 2019, and 2020 to their prior five taxable years. (This is the Tax Code § 172 provision.) Speakers noted that, if you are thinking of carrying back five years to offset prior income and get a refund, you may also have to amend state tax filings.

A key question has been how quickly taxpayers could monetize their losses and get refunds.

In the April 14, 2020, webinar 2020 Tax Filing, Payment, and Refund Deadlines, we learned that, beginning April 17, taxpayers may fax certain tentative carryback applications to the IRS (there’s a 100-page limit).

There are two forms, Form 1045 and Form 1139 (available on the IRS website).

The fax number for Form 1045 is 844-249-6237.

The fax number for Form 1139 is 844-249-6236.

Only claims allowed under the Act’s sections 2303 and 2305 may use this procedure (Minimum Tax Credit refunds and 2018, 2019, or 2020 NOL Carrybacks).

Also, the IRS has set up a COVID-19 disaster relief hot line. If you have a question, docket attorneys will call back. The general number is 202-317-5436.

Things are happening fast. Know that the IRS website is being constantly updated, sometimes more than once a day. Check there for the latest notices, guidance, and other news at

M&A impacts discussed during recent BVR town hall

There were several questions about M&A activity amid the coronavirus crisis during BVR’s recent town hall webinar. Several audience members were business brokers, who commented that deals were still getting done to some degree. Here’s what they report:

  • “Our firm handles both Main Street and lower middle market deals—80% of deals that are ‘essential’ businesses are still moving forward. Strategic buyers remain fairly confident, but PEGs are less confident. Financial buyers (Main Street) are mixed. Some are canceling and others are delaying closing dates until stay-at-home orders are lifted.”
  • “We have only had one buyer back out because of COVID-19. We have several other deals moving forward. One buyer is a PE and sees this as an opportunity. Also, the big SBA banks, such as Huntington, are automating as much of the PPP [Paycheck Protection Program] processing so they can work on transactions. The SBA 6-month payment of principal and interest on new deals is a major incentive to get deals done by Sept. 27, 2020.”
  • “We also work as a business broker for financial advisors and while M&A is slightly on hold, we are still seeing deals and financing happening.”
  • “Banks are not canceling financing already approved. Buyers are the ones going on hold. However, banks are busy hence not looking at new deals.”

As to the extent to which there has been an adjustment to private-company valuations amid the market turmoil, the panel referred the audience to an article that points out the difficulty of discerning valuation trends from the data points in the deals being done.

New tool emerges for guideline public comps

Unprepared appraisers may struggle with capturing the effect of today’s volatile economy on the value of a subject company. Fortunately, the guideline public-company method (GPCM) is one of the proven approaches that valuation experts can use to gauge general market conditions. BVR will be unveiling a new platform for this approach, the Guideline Public Company Comps Tool, an affordable alternative to other platforms on the market. A free webinar on April 21 will present a full demo of the platform. Of special interest is an exclusive feature that displays suggested comparables and allows you to choose which ones to include or exclude. No other GPC tool offers similar functionality.

Long-term view of the economic rebound

It’s a little too early to pinpoint the exact impact of the coronavirus on the economy, but a return to the level of economic activity that existed in early 2020 will probably occur at the “back end of 2021,” according to Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors (RICS). He spoke during a recent free webinar, “Impact of COVID-19 to Global Business Valuation and Appraisal,” that various valuation professional organizations (VPOs) sponsored. While there is a massive and unprecedented intervention by governments and financial institutions around the world, this will only cushion the blow, not eliminate it, he noted. A recording of the webinar is available if you click here.

Preview of the May 2020 issue of Business Valuation Update

Here’s what you’ll see:

  • A Revisit of ‘Known or Knowable’ and Subsequent Events in the COVID-19 World” (Robert B. Morrison and Alexander Dokuchaev, Rosenfield & Co. PLLC). The authors have a recurring client for whom they perform an annual valuation as of December 31. They give a best practice suggestion as to how to address the coronavirus in their valuation report. The article includes a COVID-19 timeline they developed.

The issue also includes:

  • An expanded section of “BV News and Trends/Global BV News and Trends.”
  • Regular features: “Ask the Experts” and “Tip of the Month.”
  • BV data spotlight: “DealStats MVIC/EBITDA Trends,” “FactSet Mergerstat/BVR Control Premium Study,” “Economic Outlook for the Month,” and the “Cost of Capital Center.”
  • BVLaw Case Update: The latest court cases that involve business valuation issues.

To stay current on business valuation, check out the May 2020 issue of Business Valuation Update.

BV movers . . .

People: The National Association of Certified Valuators and Analysts (NACVA) has named its outstanding members for the first quarter of 2020: James A. DiGabriele, Ph.D./DPS, CPA/ABV/CFF, CFE, CFSA, CRFAC, CVA, a managing partner of DiGabriele, McNulty, Campanella & Co. LLC, and Kerrie Merrifield, CPA, ABV, CFF, MAFF, owner of Axiom ForensicsSean Murphy has joined Houlihan Lokey’s financial and valuation advisory business to lead its transaction advisory services practice; he will be based in the firm’s Dallas office.

Firms: Stout has expanded its Transaction Advisory practice to include Financial Due Diligence and Tax Services, which is focused on mergers, acquisitions, business combinations, investments, and financing arrangements, on both the buy side and sell side … Plante Moran’s new offices in Cincinnati were showcased in a photo gallery on

Please send your professional and firm news to us at

CPE events

Learn how to streamline your guideline public-company comparable searches and results by using a new platform that uses a structure similar to the DealStats platform.

Learn how to value a distressed or impaired business with a focus on the particular issues that need to be considered relating to the current pandemic.

We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) or Sylvia Golden, Esq. (Executive Legal Editor) at:

For the latest news and updates involving coronavirus and the
business valuation community, please visit our coronavirus resource page.

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