BVR Logo April 7, 2021 | Issue #223-1

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

Caesars Entertainment sues over COVID-19-related economic damages

On March 19, Caesars Entertainment joined the long list of businesses that have filed lawsuits against their insurance companies for refusing to pay business interruption losses stemming from COVID-19-related government shutdowns of economies across the nation and world. Whether Caesars, which asserts that losses its various business entities incurred may exceed $2 billion, succeeds where a lot of other plaintiffs have failed will be worth monitoring.

Caesars describes itself as “the largest casino-entertainment company in the United States and one of the world’s most diversified casino-entertainment providers.” The suit lists about 60 insurers as defendants. Caesars claims it bought $3.4 billion of all-risk insurance for business interruption losses “precisely to cover catastrophic situations at its properties.” Regardless, insurers have refused to pay for Caesars’ “devastating losses,” Caesars says. Therefore, it decided to sue. Caesars says the insurers “are keenly aware of Caesars’ rights to coverage for its losses under the policies at issue here, and have increased premiums accordingly and inserted new exclusions in subsequent policies.”

Caesars filed suit in District Court, Clark County, Nevada. The complaint points out that, prepandemic, Caesars employed more than 79,000 people. “As of the date of filing, Caesars has been forced to significantly reduce its pre-COVID-19 workforce.” The complaint discusses the economic impact of the virus and the “crippling” government-mandated closures on the economy in Nevada, and particularly Las Vegas.

“Nevada’s labor market has been especially hard hit,” the complaint says, noting Caesars had to shut down properties in March 2020 based on orders of the gaming control boards and other civil authorities. Since then, other orders varying by degree and location have continued and “substantially impacted” the company’s properties and businesses, the suit asserts.

As BVLaw’s limited tracking of COVID-19-related cases has shown, many suits fail in the pretrial, motion-to-dismiss stage, frequently because defendant insurers are able to show that their policies include a “physical damage or loss” requirement that, many courts have found, the plaintiffs are unable to meet. Another stumbling block are virus exceptions built into the policy.

Caesars’ complaint argues the virus contaminated all the grounds and, in this way, caused physical damage to the property. It talks about “the tangible, physical presence” of the coronavirus on surfaces or in the air of its properties, which “alters, damages, and renders the physical property unfit and unsafe for its intended use.”

“Caesars fortunately had the foresight to purchase broad insurance from the Defendant All Risk Insurers,” the complaint says. Caesars notes that this type of comprehensive coverage “is very expensive. Caesars paid over $25 million in premiums for the policy year at issue.”

The complaint also points out that most “of the highly sophisticated insurance companies” issuing the all-risk policies did not include a virus exclusion for 2020. The complaint says the lawsuit specifically excluded insurers that included the exclusion from the defendant list.

Valuable lessons on using economic data in valuation reports

In his very first deposition, veteran valuation expert Jim Hitchner (Financial Valuation Advisors) learned two valuable lessons. First, know what economic data you are putting into your reports, and, second, take out economic information that you do not use. In the March issue of Hardball With Hitchner, he recounts that the first questions in the deposition targeted the economic section of his valuation report, which included the term “chained growth rates.” The attorney asked him what that meant, but Hitchner had no idea. “Not having a grasp of the underlying data that appears in your report can be a litigation risk for experts,” he writes. This is especially true during the pandemic, which has increased the importance of economic data underlying a valuation.

The rest of the issue gives a practical look at how to understand and use economic data, particularly with regard to gross domestic product (GDP), which is “one of the most important economic indicators used in business valuation,” he writes. Hardball With Hitchner is a monthly publication. For subscription information, click here.

PCAOB approves formation of new
advisory group

Fair value for financial reporting falls under the regulatory oversight of the Public Company Accounting Oversight Board (PCAOB), which will be forming a new advisory group for its standard-setting activities. The new Standards Advisory Group (SAG) will consist of 18 members from various stakeholder groups: Investors will hold the most SAG seats (five), followed by audit professionals (four), and three seats each for audit committee members or directors, financial reporting oversight personnel, academics, and others with specialized knowledge. SAG members will serve two-year terms. The PCAOB will soon release details on the nomination process for SAG members. “We are now taking the PCAOB’s engagement to a higher level by creating a new, more effective structure for the board to receive advice from our stakeholders on key PCAOB initiatives,” PCAOB Chairman William Duhnke said in a news release.

The PCAOB issues fair value audit standards and guidance on the auditor’s use of a specialist, which includes valuation experts. It also issues a regular report on audit deficiencies that points out problems with fair value issues found during audit inspections.

New edition of BVR’s Bankruptcy Case
Law Compendium

Virtually every bankruptcy case is intertwined with valuation issues at almost every stage of the process, which is why BVR’s Business Valuation & Bankruptcy: Case Law Compendium, 3rd edition, is a must-have resource. The new edition has been updated with the most recent court cases featuring business valuation and bankruptcy. It has a handy summary table of hundreds of cases (by jurisdiction) that gives you the case name, date, specific court, and the main valuation issue in the case. From the table, you can quickly refer to the case digest section for an analysis and other details, such as the names of the judge and valuation experts involved (when known). You have access to the full court opinion of each case in the report via a special Web link. In addition, several articles provide insight on the challenges of valuing financially distressed businesses. For a look inside the Compendium, click here.

Reminder: Take the Pepperdine private cost of capital survey

The Pepperdine Private Capital Markets Project conducts an annual survey of expected rates of return with respect to private companies. This year’s survey is now open, and input is sought from anyone involved in the funding of private businesses, including funding providers, recipients, investors, intermediaries, and advisors. The information you provide is confidential. The direct link to the survey is

Dates set for VSCPA forensics and
valuation conference

One of our favorite events is the annual two-day conference held by the Virginia Society of CPAs (VSCPA). This year’s VSCPA Forensic and Valuation Conference will be held September 29-30 in Richmond. The agenda is forthcoming, but this conference always has interesting and practical sessions and top-notch speakers. For more information and to register, click here.

Deadline looms for papers on new Stark regs and healthcare valuation

April 15 is the deadline for proposals for papers on issues of fair market value, general market value, and commercial reasonableness under the new Stark regulations. The Centers for Medicare & Medicaid Services (CMS) released a final rule that modernizes and clarifies the regulations that implemented the Medicare physician self-referral statute (the Stark Law). The papers will be peer-reviewed, and BVR would like to see proposals from experts in all valuation disciplines, including experts not only in business and compensation valuation, but in machinery and equipment (M&E) and real estate as well. Please send an email with a summary of the topic of your proposed paper to

Free webinar series from the IVSC starts May 17

The International Valuation Standards Council (IVSC) has announced that this year’s International Valuation Webinar Series will take place from May 17-27. The series is sponsored this year by Duff & Phelps, A Kroll Business, and will include five interactive panel discussions, assembling over 20 leading experts from around the world, on topics such as the post-pandemic economic environment and its impact on valuation, the treatment of operating leases, IBOR reform, valuing alternative investments, and more. For more information and to register, click here.

BV movers . . .

People: Michael Pickerstein, ASA, CFE, has joined San Diego-based Vantage Point Advisors as part of the firm’s expansion of its national valuation practice on the East Coast; he is in the firm’s New York City office and provides valuation services for purposes of ESOP formations and adequate consideration analyses, M&A planning and analysis, fairness opinions, gift and estate tax compliance, marital dissolution, litigation support, and shareholder dissension/oppression valuations … A number of promotions to managing director at Kroll (recently rebranded from Duff & Phelps): Ryan Johnson (valuation advisory services—New York City) has more than 15 years of financial and valuation experience and specializes in the valuation of illiquid securities and interests; Anthony Lu (valuation advisory services—San Francisco) has more than 14 years of valuation experience, specializing in options, convertible securities, stocks, warrants, profit interest, and debt instruments; Ruben Miranda (valuation advisory services—Austin, Texas) specializes in the valuation of complex personal property for ad valorem tax purposes; Daniel Platten (valuation advisory services—Chicago) supports health systems and hospitals with expertise in business, compensation, and intangible asset valuation; Gary Raichart (valuation advisory services—Silicon Valley, Calif.) has over 15 years of experience advising clients on contingent and IP valuation, commercial due diligence, financial projections, risk analysis, and market research; Priscilla Cheng (valuation advisory services—Hong Kong) has over 20 years of finance and valuation experience and advises on the valuation of intangible assets, purchase price allocation analysis, business enterprise valuations relating to M&A, taxation, IPO, and equity financing, as well as valuation of financial instruments for financial reporting purposes; William Leung (valuation advisory services—Hong Kong) has more than 15 years of experience in valuations of business enterprises, intangible assets, employee share options, and other financial instruments; and Ricardo Silva (valuation advisory services—Lisbon) has more than 18 years of experience assisting clients with fixed asset valuations, business valuations, fairness opinions, purchase price allocations, and determination of fair value for tangible and intangible assets.

Firms: New York City-based Berdon LLP has relocated its Long Island, N.Y., office to new space in Jericho; the new space is designed to adapt to COVID-19 health and safety guidelines, and all conference rooms are Wi-Fi-accessible and Zoom ready … FTI Consulting Inc. will acquire The Rhodes Group, a leading construction consulting firm with offices in Pittsburgh and Houston; the acquisition is expected to close during the second quarter of 2021 … Humphrey CPA Group (Indianapolis) has a new office location effective April 1: 5915 S. Emerson Ave., Suite 400.

Please send your professional and firm news to us at

CPE events

  • Valuing Shareholder Cash Flows. April 21, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Travis Harms (Mercer Capital) and Z. Christopher Mercer (Mercer Capital).

In the third and final webinar of this three-part series, the authors of the new third edition of Business Valuation: An Integrated Theory examine shareholder cash flows and discuss the restricted stock discount (and the restricted stock studies) and the pre-IPO discount. They also delve into the inputs to the quantitative marketability discount model (QMDM).

  • Valuing Telehealth Services. April 27, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Todd Zigrang (Health Capital Consultants) and Jessica Bailey-Wheaton (Health Capital Consultants).

Learn about the types of telehealth services typically provided, such as clinical services, management services, and the provision of technology, and how these services may vary by healthcare industry subsector. This is part of BVR’s Special Series presented by the BVR/AHLA Guide to Healthcare Industry Finance.

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


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