BVR Logo April 13, 2022 | Issue #235-2

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

Goodwill impairments in U.S. doubled in 2020: Kroll study

Total goodwill impairment in U.S. public companies was $142.5 billion in 2020, more than double the $71 billion recorded in 2019, according to the “2021 U.S. Goodwill Impairment Study” by Kroll. Even so, the level of impairments still fell short of the amount recorded at the onset of the 2008 financial crisis, which was $188.4 billion, the study says.

The study examines general and industry goodwill impairment (GWI) trends of more than 8,900 U.S. publicly traded companies through December 2020. The top three industries with the largest increase in GWI in 2020 were energy, financials and real estate, and industrials. This edition also gives a preview of the 2021 recovery from the COVID-19 pandemic on goodwill impairments taken by U.S.-based public companies. “At the time of writing, the disclosed top 10 GWI events for 2021 reached a combined $5 billion, which pales in comparison to the top 10 in 2020 of $61.9 billion,” the study says.

No proof of personal goodwill in Utah divorce case

In some states, personal goodwill in a business is not part of the marital estate—but you have to have evidence that it exists. In a Utah divorce case, the wife had a veterinary pharmaceutical business with a number of employees. In its decision, the court noted that Utah case law generally associates personal goodwill with “sole proprietorships essentially run by one person” and that the wife’s business was not comparable to a sole proprietorship. The court also noted that the wife did not provide any evidence that her involvement in the business “is essential for that business to continue, given the number of employees and the extent of the operations that it has.” The wife presented a valuation rebuttal witness, whose testimony was excluded for procedural reasons. But the court noted that, even if it had not excluded the rebuttal expert, “his testimony was unpersuasive.” The wife appealed the decision, but the appellate court upheld it.

There are other issues in the case, including the wife’s “intentional scheme” to dissipate assets and devalue the marital estate and that the imposed sanctions against her were greater than the injury her misconduct caused.

The case is Erickson v. Erickson, 2022 UT App 27; 2022 Utah App. LEXIS 27; 2022 WL 619796, and a case analysis and full opinion are available on the BVLaw platform.

Gary Trugman shares sample valuation reports

A good selection of eight sample valuation reports is available on the companion website of Gary Trugman’s book, Understanding Business Valuation, 6th edition. The website is available to buyers of the book and subscribers to the BVResearch Pro platform (who already have the book in their libraries). Here is a description of the reports—and more will be added in the future:

  • Member buyout. A calculation report for a 100% equity interest for a possible member buyout of a transportation company;
  • Matrimonial litigation. A valuation report for a 100% equity interest in an insurance agency;
  • Limited partnership interest. Valuation of a 90% limited partnership interest in an asset holding company for estate tax purposes;
  • Estate tax. Valuation of a 51% interest in a life insurance brokerage;
  • Fair value. Valuation of a 25% common stock interest in a clothing manufacturer for a shareholder buyout;
  • Real estate holding company. A valuation of a 45% interest and a 10% interest in an investment firm that operates as a commercial real estate holding company for estate and gift tax purposes.
  • Asset holding company (marketable securities). Valuation of a 49.5% limited partnership interest in an investment firm for gift tax purposes; and
  • Proposed sale of a franchise business. Valuation of a 100% interest in a franchised business for a proposed sale to the franchisor.

The companion website also includes appendices, key court cases, glossary of terms, updated valuation standards, and an explanation of data sources.

Tennis great Becker convicted of hiding assets in bankruptcy

In London, ex-tennis star Boris Becker has been found guilty of four charges under the UK’s Insolvency Act relating to his 2017 bankruptcy, the BBC reports. He was found guilty of transferring hundreds of thousands of pounds from his business account after his bankruptcy, failing to declare a property in Germany, and concealing €825,000 of debt. He could face a jail sentence carrying a maximum term of seven years for each count.

Coincidentally, BVR recently did a webinar on fraudulent transfers in a bankruptcy context. Jeff Baliban, a practitioner who currently teaches statistics at New York University’s School of Professional Studies, explained that the key issue in matters of fraudulent transfers is solvency—whether the debtor was solvent when it made the transfer (or would remain solvent as a result of the transfer). Baliban described the three solvency tests (under Section 548 of the Bankruptcy Code): (1) the balance sheet test (do assets exceed liabilities?); (2) the cash flow test (can the company pay off debts as they come due?); and (3) the capital adequacy test (does the company have enough capital to operate?). If the debtor fails any one of the tests, it is an indication of a fraudulent transfer.

Twitter poll on the size effect

Wes Gray, a Ph.D., financial analyst, and CEO of Alpha Architect, recently conducted a poll on Twitter about the size effect (implicit in traded stocks where returns can be observed). About 2,200 people responded to the poll. The results:

  • Over half (51%) believe there is a size effect (i.e., smaller firms tend to outperform bigger firms);
  • A quarter (25%) believe there is an inverse (negative) size effect (i.e., bigger firms tend to outperform smaller firms); and
  • The remainder (24%) believe there is no size effect.

Ongoing academic research concludes that the size effect has diminished or disappeared since it was first documented in 1981 (see our last coverage here). But the vast majority of valuation practitioners believe that the size premium still exists. During a BVR webinar in 2020, a poll of the audience (of about 200 attendees) found that 94% of them use a size premium.

Keynote announced for NYSSCPA valuation conference

Former federal prosecutor Sharon Cohen Levin, a leading expert in anti-money laundering (AML), Bank Secrecy Act, economic sanctions, and asset forfeiture matters, will give the keynote at this year’s New York State Society of CPAs’ Business Valuation and Litigation Services Conference. This full-day conference—which BVWire attends every year—will feature many topics including an update on BV-related court cases, tax litigation involving valuation issues, SPAC warrant valuations, debt valuation, control premiums, exit planning, and more (eight CPE credits available).

Full agenda for the AAML/BVR divorce conference

The full agenda has been posted for the National Divorce Conference, sponsored by the American Academy of Matrimonial Lawyers (AAML) and BVR. The conference will be both online and on-site at the Venetian Resort on September 18-20, and up to 17.5 CPE/CLE credits are available. Leading matrimonial attorneys and financial experts will give you critical insights in sessions covering financial, valuation, forensic, and legal issues surrounding this growing area of practice. We hope to see you at this unique event!

ASA confab moves to Tampa

Originally announced for Fort Lauderdale, Fla., the 2022 American Society of Appraisers’ International Conference (ASAIC22), will be held in Tampa, Fla., September 10-12 (same dates as before). A preliminary schedule has been posted, which shows more than 65 educational sessions across six discipline tracks. There will also be some preconference courses (starting Wednesday, September 7) and the second annual golf outing on September 9. Sessions will be presented live on-site in Tampa and available via live stream for virtual participants. All attendees will have access to OnDemand viewing post-conference.

VAB6 review on IVSC website

A comprehensive review of Valuing a Business, 6th edition (VAB6) is on the website of the International Valuation Standards Council (IVSC), calling it a “foundational reference for business valuation education worldwide.” Ray Moran, ASA, MRICS, who specializes in valuations for cross-border mergers and acquisitions, wrote the review. He is director and chair of the Marketing Committee at the iiBV and also serves as managing director in the FON Valuation Services group. “Valuing a Business has been on my bookshelf since the 1980s, and I’ve owned several editions through the years,” writes Moran. “While I’ve referred to it as a resource early in my career in the U.S., it became indispensable when I moved to Hong Kong in 2001.” You can read the review if you click here.

The book, which Shannon Pratt first wrote in 1981, is being published with underwriting sponsored by the American Society of Appraisers (ASA) Educational Foundation. Pratt passed away, but the ASA assembled a group of contributors to bring the book up-to-date and maintain Pratt’s legacy for the valuation profession.

BV movers . . .

People: KPMG Canada partner Thomas Lee will take over as chair of the Financial Instruments Board of the International Valuation Standards Council (IVSC), taking the reins from Gavin Francis (HSBC Holdings PLC), who steps down after three years in the role; Lee has over 20 years of experience in public practice and leads the KPMG Valuation Services’ Financial Instruments Team … Brian Schellinger, CPA, CVA, has been promoted to partner at Minnesota firm Schlenner Wenner & Co.; he’s in the firm’s St. Cloud office … Several valuation analysts and associates were recently added to the staff at Valuation Research Corp. (VRC): Nick Biasi (New York); Jack Curley, Manuja Patel, and Andrew Choi (Boston); Carrie Raymond (Chicago); Patrick Niederjohn (Cincinnati); Herwin Morales (Dallas); Katie Scott (Milwaukee); Pierre Barat, Matthew Kutz, Matthew Leo, Mandy Stone, and Shawn Smith (Princeton, N.J.); and Shan Wei and Keith Wong (San Francisco).

Firms: Kroll has launched a Valuation Advisory Services practice in Luxembourg led by Armand Kantar, CFA, as director … Atlanta-based Aprio LLP has acquired a division of the outsourcing firm The Back Room of Pampanga, Philippines, with plans to bring on 82 new professionals for its new subsidiary, Aprio Philippines; The Back Room specializes in outsourcing administrative, legal, marketing, and accounting professionals … Rochelle Park, N.J.-based global talent advisory firm ZRG has acquired RoseRyan of Newark, Calif., a firm that provides outsourced accounting for startups, corporate governance, interim solutions, and strategic projects such as IPO readiness, SEC reporting, financial planning and modeling, technical accounting, audit support, and M&A.

Please send your professional and firm news to us at

CPE events

  • Power Panel: Industry Insights, April 14, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Jay E. Fishman (Financial Research Associates), Don Erickson (Mercer Capital), and Bryce Erickson (Mercer Capital). CPE credits: 2.0.

Take a dive into three industries—sports franchises, oil and gas, and software as a service (SaaS)—with a panel of top thought leaders.

Appraisal reviews are increasing in importance and frequency. This discussion will cover topics important to the process of performing an appraisal review as well as responding to inquiries from a reviewer of a valuation prepared for financial reporting.

ASA 2021 International Conference

We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) at:


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