BVR Logo August 25, 2021 | Issue #227-4

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

Appellate court affirms zero DLOM for a 100% control interest

In a divorce matter, an Indiana appellate court has upheld the lower court’s decision not to allow a discount for lack of marketability (DLOM) on a 100% control interest in a business the husband owned. The business consisted of six dental practices, to which the husband applied a very high DLOM, primarily to reflect that most of the revenue was from Medicaid (according to him). The wife’s expert applied no DLOM to the valuation, and the trial court accepted it partly because the husband had shown no intention of selling the business. This is the first time the issue of intention to sell has arisen in Indiana in this context. The appellate court affirmed the decision of the trial court. There are some interesting points in the details of the case, which is Kakollu v. Vadmaludi, 2021 Ind. App. LEXIS 232; 2021 WL 3137204. A case digest analysis and the full opinion are available on the BVLaw platform.

Extra: BVR’s recent DLOM survey reveals that there is significant disagreement among valuation experts as to whether a DLOM is appropriate for a 100% control interest.

Sneak preview of updated data on
identifiable intangibles

Get an advance look at the new edition of a guide that analyzes data on the useful lives of intangible assets culled from over 15,000 purchase price allocations. This will be part of a presentation by Raymond Rath (GlobalView Advisors) in an August 26 webinar that gives key insights on the determination of the economic and useful (amortization) lives for intangible assets. You’ll also get an overview of key accounting guidance pertaining to the valuation of intangible assets as well as industry-specific factors impacting the valuation and economic lives of different types of intangible assets. He will also discuss the data in the guide, Benchmarking Identifiable Intangibles and Their Useful Lives in Business Combinations, 3rd edition, which is available now. Tune in to the webinar by clicking here.

Surprising results in private cost of
capital survey

Over half (58%) of privately held business owners believe their cost of equity is less than or equal to 12%, according to the “2021 Private Capital Markets Report” from Pepperdine University Graziadio School of Business and Management. Approximately 21% of respondents indicated their business cost of equity capital is in the range of 9% to 10%, the range most cited. These low figures indicate that there may be a misunderstanding among business owners about the returns that investors require.

The report is the result of an annual survey of expected rates of return with respect to private companies. Respondents include senior lenders, asset-based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately held businesses, investment bankers, business brokers, limited partners, and business appraisers. We note that the majority of private firms that responded had 20 employees or fewer, with 46% having no more than five employees. Also, over half of them had annual revenues less than $1 million.

Respondents to the 2021 survey will receive the report for free and should have already received coupon codes for this and other reports. The codes will expire at the end of this month, so, if you are planning to use one of them, please do it quickly. For others, a small fee of $100 will be charged for the report, which is available if you click here.

Extra: Selected required rates of return from the Pepperdine survey are now included in the Cost of Capital section of the monthly Business Valuation Update.

New paper on CEO tenure and firm value

If you’re valuing a business with a CEO who has been in that job for 20 years, is that a positive or a negative? A new research paper shows that there is a “hump-shaped CEO tenure-firm value relation.” That is, CEOs who stay on too long may be adversely impacting firm value. When do they wear out their welcome? The researchers say the average “turning point” is 14 years, and they note that even successful CEOs “may be associated with declining firm value over the later course of their tenure.” The paper adds to the longstanding debate about CEO term limits and examines existing literature on CEO impact on firm value and performance. To download the paper, click here.

Citizens to acquire Willamette
Management Associates

Citizens Financial Group Inc. will acquire Willamette Management Associates, a leading valuation consulting and forensic analysis firm with offices in Chicago, Atlanta, and Portland, Ore. This acquisition will significantly expand Citizens’ valuation services division and put it “among the top valuation services providers in the country,” according to a press release. Citizens also says that it will also accelerate the build-out of its corporate financial advisory capabilities, which includes the 2019 acquisition of Bowstring Advisors and the 2020 acquisition of Trinity Capital Partners. Terms of the transaction, which is expected to close this quarter, were not disclosed, the release says.

Revised glossary included in updated IVS

One of the changes in the latest edition of the International Valuation Standards (IVS) is a revised glossary of terms. You can find a red-lined version that shows the changes from the prior glossary if you click here. Key point: The glossary defines certain terms used in the IVS, so it is only applicable to these particular standards. You’ll also see that it does not contain basic valuation, accounting, or finance terms.

The updated IVS have an effective date of Jan. 31, 2022. Valuers can use the updated standards before the effective date and will need to make clear which edition of the IVS they are using when preparing a valuation report. Among other revisions, there is a new chapter, “IVS 230 Inventory,” as part of the intangible asset standards. IVSC member and sponsor organizations are provided with digital copies of IVS. Nonmembers/sponsors can access IVS through the IVS Online portal.

ASA’s Johnnie White joins iiBV board

The International Institute of Business Valuers (iiBV) has announced that Johnnie White, CEO of the American Society of Appraisers (ASA), has joined its board of directors. White has close to 30 years serving in a variety of management and leadership roles. At the ASA, he is responsible for the oversight and management of the organization’s business and executing the directives the ASA board of governors and its executive committee set.

BV movers . . .

People: Several promotions in the business valuation department at Akron, Ohio-based Apple Growth Partners: Bethany (Dria) Lawrence, ASA, to manager; Eric Flickinger, CPA, ABV, to senior manager; and Matthew J. Silla, ASA, CFA, to principal … Muath Alkhalaf, ASA, has joined the board of directors of the International Institute of Business Valuers (iiBV); he oversees valuation control for the Public Investment Fund (PIF) of Saudi Arabia, and he presently serves as a member of the Advisory Forum of the International Valuation Standards Council (IVSC) and as a board member of the Saudi Authority for Accredited Valuers (TAQEEM).

Firms: Citizens Financial Group Inc. will acquire Willamette Management Associates, a leading valuation consulting and forensic analysis firm with offices in Chicago, Atlanta, and Portland, Ore. (see the separate item in this issue for more details) … Grimbleby Coleman CPAs (Modesto, Calif.) is adding Ristau & Co., also in Modesto … St. Louis-based RubinBrown LLP has acquired Liberty Technology Advisors of Deerfield, Ill., a firm that provides technology and software consulting services … Springfield, Mo.-based BKD LLP has launched a new ESG consulting practice to assist clients with their environmental, social, and governance strategies and reporting … Milwaukee-based Wipfli LLP is launching services for the wealth and asset management industry; the new practice will include more than 150 associates … Florham Park, N.J.-based Wiss & Co. LLP has launched a new technology advisory practice that will advise on technology process reviews, strategic software selections, and software implementation support focusing on ERP, CRM, point of sale, and operational systems across a variety of industries.

Please send your professional and firm news to us at

CPE events

Misunderstandings and blind spots affect valuations of virtually all businesses that have real estate as a principal asset. While business appraisers are not expected to value the real estate, they do need to know the right questions to ask.

Key insights into the determination of the economic and useful (amortization) lives for different types of intangible assets, including a look at purchase price allocation data from the DealStats transaction database.

ASA 2021 International Conference

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


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