Bombshell ruling on exclusion of damages experts in NFL case

“The Court agrees that [the experts’] testimonies based on their flawed methodologies should be excluded.” So wrote a federal judge in overturning the $4.7 billion verdict against the NFL in the Sunday Ticket antitrust case. Both experts are economists, and the written opinion goes into some detail about their methodologies.

Thrown for a loss: The judge wrote that one expert’s testimony “was not the product of sound economic methodology” and criticized the other expert’s “multiple distributor” models. “Without the testimonies of [the two experts], no reasonable jury could have found class-wide injury or damages,” the judge wrote. The judge did not order a new trial.

Unreliable testimony is the target of the recently revised Rule 702, the federal rule of evidence regarding testifying experts, which was changed to stress the court’s gatekeeping function. Under Daubert or similar standards, courts should disqualify testifying experts who are not competent or who can’t offer helpful evidence. But the courts were lax in this function and were going more to “weight than admissibility,” that is, just letting the experts testify and then the judge deciding on the weight to give that testimony or deferring that decision to the jury. The changes to Rule 702 became effective this past December. A recent case we covered here illustrates how more experts are being excluded from testifying under the revised rule.

Stay tuned for more commentary on this case, which is In re National Football League’s Sunday Ticket Antitrust Litigation, 2:15-ml-02668, U.S. District Court, Central District of California (Los Angeles), Aug. 1, 2024. The opinion, which just came out at the time of this writing, will appear on the BVLaw platform along with a case digest analysis.

Extra: Economists have the lowest exclusion rate (27%) of the three types of financial experts, according to the “2022 Daubert Study” from PwC. Appraisers had a 38% exclusion rate, and accountants had a 32% rate, the study found.

Divorce court sets valuation date that veers from state’s norm

In Kentucky, the valuation date for a marital dissolution case is generally the date of divorce. In a new case, a court did not use the date of divorce but had good reasons. On appeal, the valuation date was affirmed.

Time is money: The couple divorced on June 30, 2020, which was the date the husband argued on appeal should be the valuation date. That way, the effects of COVID-19 could be factored into the valuation. Also, the company got hit with a large financial penalty from the FDA, which would also have impacted the valuation. But the family court chose Dec. 31, 2019, as the valuation date, at which time neither of those events were known or knowable.

The court chose the year-end 2019 date because the financials were set and agreed upon by both parties. If the divorce date of June 30, 2020, were used, there would be disagreement about any adjustments needed to round out the year, and this couple “could not agree on anything.” Also, the husband did not provide any evidence of actual business damages related to COVID-19. Plus, the husband never specifically asked the trial court to use the date of divorce. The appellate court affirmed the valuation date, noting the trial court gave a “well-reasoned explanation” as to why that date was chosen.

The case is Delk v. Delk, 2024 Ky. App. Unpub. LEXIS 407, and a case analysis and full court opinion are on the BVLaw platform.

BVR forming a Leadership Council to help guide the profession

Want to help shape the future of the business valuation profession? Consider joining BVR’s inaugural Leadership Council. This will be an independent, profession-wide group that will share insights, drive innovation, and shape the future of business valuation practice. In addition, there are some benefits to Council members, including the opportunity to network, participate in public-facing events, and have VIP access to valuation research insights. Interested? The application deadline is August 31. For more details and eligibility requirements, click here.

New survey: Do you have a staff shortage?

That’s the topic of this month’s “Two-Minute Practice Builder” survey. Is your firm experiencing a shortage of staff? At what level? Junior, senior, or clerical? Please take just a few minutes to give us your observations—click here to take a fast survey. The survey deadline is August 31, and we’ll share the results in the September 11 issue. Thanks for participating!

Two big valuation practices in CBIZ-Marcum combo

The acquisition of Marcum by CBIZ will create the seventh-largest accounting services provider in the U.S., according to a press release. The acquisition will also involve two substantial valuation practices. At Marcum, valuation services are in the firm’s Valuation, Forensic and Litigation Services area, which is under the Advisory Services group. The CBIZ Valuation Group is also under an Advisory Services group and handles appraisals for business enterprises, complex transactions, tangible assets, and real estate.

What happens when two large valuation practices merge? Are they fully integrated together? What kinds of synergies are expected? Are the cultures very different between the two groups? What special challenges do you see going forward? How will this merger fuel growth in the practice? We’ll ask those answers—and more—once the transaction closes, which is expected in the fourth quarter of 2024. Stay tuned!

Reminder: Email your senator regarding DOL’s ESOP valuation rule

Regardless of whether your practice involves ESOP valuations, you will want to consider a request from The ESOP Association (TEA) to email your senator about signing a bipartisan letter being sent to the Department of Labor (DOL) about an important valuation rule. The letter is from Senators Roger Marshall (R-KS) and Tim Kaine (D-VA) and is also asking the DOL to consult with Treasury about the rule (as required by law) and to have a robust public comment period once the draft rule is released. To see the letter and to send an automated response to your senator, click here.

Have you commented on the revisions to the cheap stock guide?

Comments are due by September 20 on a working draft of two updated chapters from the AICPA Valuation of Privately-Held Company Equity Securities Issued as Compensation guide. The chapters address secondary market transactions, and the revisions are designed to better align with FASB ASC 820, Fair Value Measurement, and FASB ASC 718, Compensation—Stock Compensation. The new guidance will likely have significant implications for financial reporting valuations of private-company common stock underlying stock-based compensation awards.

Want to volunteer? Consider the TAF BV Resource Panel

September 1 is the deadline to apply to join The Appraisal Foundation’s Business Valuation Resource Panel. The panel oversees the development of BV valuation advisories, provides input on exposure drafts, and offers insight on emerging issues or other significant matters. The panelists will serve staggered terms commencing Jan. 1, 2025, for up to three years. Reappointments thereafter will be made annually as needed. For more information and to apply, click here.

IVSC wants feedback on valuation topics for agenda

The International Valuation Standards Council (IVSC), the global standard-setter for valuation practice and the valuation profession, has opened its 2024 Agenda Consultation to solicit input to help set the agenda for the future development of the International Valuation Standards (IVS). Feedback is wanted about valuation topics that the IVSC should address as part of its current agenda as well as additional valuation topics that should be prioritized or added to the agenda. The document highlights several key themes for consideration, including ESG, technology, and “valuation risk,” i.e., quality control. Comments are due October 9. To download the 2024 Agenda Consultation paper and how to submit feedback, click here.

BV movers . . .

People: Nicholas Landera, CPA, CVA, CFE, has been admitted as a partner at New York City-based Eisner Advisory Group; he is in the firm’s Miami office and his specialties are complex commercial litigation, forensic investigations, lost profit damages, business valuation, and business interruption.

Firms: Los Angeles-based Marshall & Stevens, an independent valuation and dispute consulting firm, has merged with ValueScope Inc., headquartered in the Dallas-Fort Worth metroplex; this is the fifth valuation, consulting, and litigation support firm to join Marshall & Stevens since March 2023 … Two of the largest business advisory firms in the nation will combine as CBIZ plans to acquire the nonattest business of New York City-based Marcum this fall; Mayer Hoffman McCann will acquire the attest business of Marcum (see separate item in this issue) … CliftonLarsonAllen (CLA) has acquired Axiom CPAs & Business Advisors of Albuquerque, N.M., a firm with four partners and 16 team members that provides tax, assurance, and general accounting services, as well as specialty tax credit and incentive services, and state and local tax consulting … Saginaw, Mich.-based Yeo & Yeo CPAs & Advisors has added Berger Ghersi & LaDuke PLC (BGL) of Bloomfield Hills, Mich. … Dubuque, Iowa-based Honkamp has acquired The Brems Group, a firm with about 20 employees in Cedar Rapids and Coralville, Iowa.

CPE events

Retaining BV Talent: Strategies for Success From Partners Winning the Game, August 8, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Andrew Mackson (InteleK Business Valuation & Advisory) and Mikhail Munenzon (InteleK Business Valuation & Advisory). CPE credits: 2.0.

Recruiting business valuation talent is one thing but retaining them is another. In this webinar, we will be focusing on how to keep that key BV talent from jumping ship.

Understanding the Dental Practice Market: Trends, Transactions, and Transformations, August 15, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Melissa Gragg (Bridge Valuation) and Maria Melone (Caber Hill Advisors). CPE credits: 2.0.

The dynamics of buying and selling dental practices, the rise of dental service organizations (DSOs), and the strategic considerations for maximizing practice value are discussed.