BVWire Issue #191-1 | August 1, 2018


New DealStats platform is now live!

BVR has officially launched DealStats, which merges Pratt’s Stats and Public Stats transactions into one powerful platform with state-of-the-art search capabilities, additional data fields, easier saving and report generation, and much more. Current subscribers to Pratt’s Stats will automatically get access to DealStats.

One of the beta testers was Lance Schmidt, CVA, CBI, CBB, former CPA, president of National Business Appraisers Inc., and a valuation instructor with the California Association of Business Brokers (CABB). “The new platform is a valuation analyst’s and statistician’s dream,” he says. “The added conditional ‘and/or’ capabilities are a boon to those who use DealStats. The slide bar (or the use of beginning and end amounts or values for revenues, EBITDA, etc.) saves major time in refining a search.”

On August 9, there will be a free one-hour webinar that introduces DealStats. You can register for this webinar if you click here. In the meantime, take a look at the DealStats web page, which has a companion guide, videos, and FAQs.

back to top

DOL backs judgment against trustee in Brundle ESOP litigation

In the fiercely litigated Brundle v. Wilmington Trust ESOP case, in which the district court concluded the ESOP trustee had caused the plan to overpay by almost $29.8 million, the trustee has appealed and outside interests have started to weigh in.

The case made waves because the independent trustee and valuation firm representing the plan’s interests had extensive ESOP experience. Also, in ruling on the trustee’s post-decision challenge, the district court conceded some valuation-related errors but found these did not change the outcome. As we reported here, the ASA recently filed an amicus brief with the 4th Circuit Court of Appeals in which the organization aligned itself squarely with the trustee and valuator. The brief rebukes the district court for favoring the “rough” and “after-the-fact opinion” of the plaintiff’s expert over the valuator’s “sound” contemporaneous analysis and value conclusions.

‘Strong interest’ in outcome: Now comes the Department of Labor’s amicus brief asking the 4th Circuit to uphold the district court’s ruling. The brief notes that, under the applicable law, “fiduciaries must make ‘good faith’ determinations of the fair market value when they purchase employer stock for the ESOP and may not blindly rely on valuation professionals they retain.” The DOL has a “strong interest in urging this Court” to reject the trustee’s arguments, which, if successful, “would undermine this well-established case law and diminish the fiduciary’s obligations.”

The brief alleges the trustee “rubber-stamped” an obviously problematic valuation and then expected the district court to defer to the appraiser’s judgment. However, case law holds “that merely hiring an adviser cannot insulate fiduciaries from consequences of their decisions.” The DOL brief says the court here “heard witnesses from both sides, including experts,” and, based on the controlling case law, “focus[ed] on whether the process the trustee used to determine fair market value is consistent with professional norms and its ERISA fiduciary obligations.”

Case law makes clear that hiring an appraiser does not lessen the court’s scrutiny “because an adviser’s opinion does not ‘whitewash’ a fiduciary’s own actions,” the brief says. Giving blind deference to the financial advisor’s opinion “eviscerates ERISA’s prohibitions in areas where strong incentives for abuse and great risk to participants exist,” the DOL brief says. It states that the district court “appropriately reviewed the trustee’s efforts” in this regard.

In terms of specifics, the brief contends the district court was correct in ruling the trustee should not have paid a 10% control premium after the court heard the evidence and found the ESOP did not receive “effective control of the company.” The court’s analysis on actual control “accords with a leading valuation text, which recognizes that the question of control is complex and requires fact-based analysis,” the DOL brief says.

Expect to hear more about this case.

Digests of Brundle v. Wilmington Trust N.A., 2017 U.S. Dist. LEXIS 35811, and Brundle v. Wilmington Trust N.A. (Brundle II), 2017 U.S. Dist. LEXIS 97752, and the court’s opinions, are available at BVLaw.

back to top

AICPA stands by ABV decision; critics rebut timeline

In a letter to CPA/ABV holders, the AICPA says it has “carefully considered” the concerns about opening up the ABV credential to non-CPAs and that it stands by its decision to do so. A group of prominent CPA/ABVs had criticized the decision, and a survey was taken that found that the vast majority of respondents opposed the change (see prior coverage).

The letter, signed by Susan S. Coffey, the AICPA’s executive vice president of public practice, discussed the reasons and the need for the change. Addressing criticism that the decision process was not open and transparent, Coffey wrote that the AICPA will enhance the process going forward and is “looking at ways to better capture and assess broader input.” The letter thanked ABV holders for their “passion, dedication and volunteer service” over the past 20 years and hoped that the community could look beyond the differences of opinion and work together to build the profession’s future. A copy of the letter is available if you click here.

Shortly after the letter was posted, critics issued a detailed “forensic investigation and rebuttal” of an AICPA-prepared timeline of events leading up to the change, saying that it is inaccurate. The AICPA had previously revised the timeline and apologized for any confusion it may have caused. However, the critics still believe the timeline does not accurately reflect what happened during the decision process leading up to the vote to change the eligibility for the ABV. The timeline rebuttal, almost 4,000 words, is dated July 28, 2018, and was signed by 27 prominent CPA/ABVs who call for the AICPA to: (1) suspend the change to the ABV criteria; (2) consider input from stakeholders and have the Council revote; and (3) if the AICPA still wants to issue a valuation credential to non-CPAs, a second credential should be created separate from the ABV.

A full version of the timeline rebuttal will appear in the next issue of Jim Hitchner’s journal Financial Valuation and Litigation Expert due out next week. Hitchner was one of the signers of the Open Letter that criticized the AICPA’s ABV decision as well as the timeline rebuttal. He will moderate a free one-hour webinar on August 8 that will present a “candid discussion” of the AICPA’s decision and the critics’ responses.

back to top

Tax Reform 2.0 in the works

Republicans from the House Ways and Means Committee released a very top-level outline of their plans for what they call “Tax Reform 2.0” The plan has three main parts:

  • It would make permanent many of provisions that had been set to eventually expire in 2026 (but the outline does not specify which ones);
  • It will have several provisions to promote family savings; and
  • It will allow new businesses to write off more of their startup costs and “remove barriers to growth.”

back to top

Storytelling with data

A big seller at the Wiley booth at the NACVA conference in Las Vegas was a book titled Storytelling with Data. It’s critical for valuation reports to have an effective narrative that goes along with the data, but many reports are weak in the narrative area, so it’s no wonder the book was a big hit. The author is Cole Nussbaumer Knaflic, and she has a blog at Her book would be a good companion to Narrative and Numbers: The Value of Stories in Business, by Dr. Aswath Damodaran (Stern School of Business, New York University).

back to top

Agita at casual dining chains

A Wall Street Journal article reveals that many larger casual-dining spots are struggling, but many under new management are reinventing themselves in order to compete. While this shows promise, more restaurant closures are likely before the sector can fully regain health, according to Josh Benn (Duff & Phelps), who is quoted in the article. By the way, D&P’s “Restaurant Quarterly Update—Summer 2018” is now available.

back to top

Paper examines cost of capital for banks

A new paper analyzes the cost of capital for banks during the financial crisis and in relation to the Dodd-Frank Act and Graham-Leach-Bliley Act. “We find some evidence that stress testing has lowered the cost of capital for the largest stress-tested banks, although not for those added more recently to stress testing,” say the authors, who are with the Federal Reserve. The paper is titled “Regulatory Changes and the Cost of Capital for Banks,” and you can download it here.

back to top

Global BV News

Two major conferences in Romania

There are two major upcoming events for the international community of valuers in collaboration with the World Association of Valuation Organizations (WAVO) and the International Valuation Standards Council (IVSC).

The 9th World Association of Valuation Organizations Congress will be held September 6 in Bucharest, Romania. This year’s congress is about ethics in the valuation profession, and you can find more details and register if you click here.

The IVSC-ANEVAR European Valuation Conference Business Valuation in a Globalized World will be held on September 7, also in Bucharest, Romania. The event will feature presentations from leaders in the valuation profession. To register or for more information, click here.

ANEVAR is the National Association of Authorized Romanian Valuers. For more information on this organization, click here.

back to top

Damodaran’s global seminars

Professor Aswath Damodaran (Stern School of Business, New York University) has a number of single and multiday business valuation seminars around the world, including Hong Kong (August 27-28), Vietnam (August 30-31), Amsterdam (September 26) and other locales. You can find his full schedule, including registration links, if you click here.

back to top

BV movers . . .

People: Several developments at Columbus, Ohio-based GBQ: Mallory Ashbrook, JD, CPA, has earned the Certified Valuation Analyst (CVA) designation from the National Association of Certified Valuators and Analysts (NACVA); Eric Dollin, ASA, has been promoted to valuation senior manager (he’s in the Indianapolis, Ind., office); and Megan Eberhart, CFA, has been promoted to valuation manager … Misty Decker has been named a director of the fraud, valuation and litigation support group at Greenville, S.C.-based Elliott Davis; she’ll be based in the Nashville, Tenn., office … Timothy Jamison has been promoted to director at Prairie Capital Advisors Inc., a leading corporate advisory and investment banking firm … Dimitri Drone has joined Houlihan Lokey as a managing director as part of a continued build-out of the firm’s pharmaceutical and life sciences valuation services; he’s based in New York City.

Firms: New York-based Marcum has acquired GBH CPAs of Houston, effective July 1; GBH brings four partners and 25 associates to Marcum … Fort Worth, Texas-based Whitley Penn has leased two full floors in Frost Tower Fort Worth (FTFW), the downtown’s newest high-rise … RKL LLP expanded its presence in the Philadelphia area by opening an office in Exton, Pa., with workspace for up to 90 professionals; this is the seventh Pennsylvania location for the firm … HoganTaylor LLP will move its 75-employee operation in suburban Oklahoma City to a former Mercedes dealership; the move will be completed by November 2019.

Please send your professional and firm news to us at

back to top

CPE events

  • Cannabis Industry and Valuation Update (August 7), with Ronald Seigneur (Seigneur Gustafson LLP), Stacey Udell (HBK Valuation), and Brenda Clarke (Seigneur Gustafson LLP).

    Since the cannabis business is a high growth industry, valuations in this area are in demand, but many “must know” considerations impact engagements.
  • DealStats: Market Data. Evolved. (A Free Webinar) (August 9), with Adam Manson, Mitchell Cameron, and Oday Merhi (all with Business Valuation Resources).

    A demo of the new platform that merges Pratt’s Stats and Public Stats. Please note that this webinar covers the same content as the July 11th webinar.

back to top

New and Trending
LinkedIn Discussions

BVWire Article: “Amid Outcry, AICPA Will Improve Decision Process Re: Credential Matters”

Is Partnership Profiles Still Around?

ABV Webcast

Your discussion could be featured here—BVR's LinkedIn group is a place for valuation professionals to share, discuss, and learn about compelling BV topics. If you're not already a member, request to join:

back to top

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

Not a BVWire subscriber?
Get on the list today.

In this issue:

DealStats goes live

ESOP case

ABV hubbub

Tax Reform 2.0

Stories and data

Dining chains

Bank cost of capital

Global news

BV movers . . .

CPE events

LinkedIn discussions



Copyright © 2018. All rights reserved.

Business Valuation Resources, LLC
111 SW Columbia Street, Suite 750
Portland, OR 97201
P: 1-503-479-8200