FASB goes live
Beginning on January 8, 2008, the Financial Accounting Standards Board (FASB) will launch a series of free webcasts focusing “on topics of importance to its constituents,” according to its latest announcement. This first one, “Towards a Global Reporting System: Where Are We and Where Are We Going?” will feature panelists Robert Herz (FASB chair), Peter Bridgman (PepsiCo), Greg Jonas (Moody’s) and Sam Ranzilla (KPMG). Moderated by Wall Street Journal reporter David Reilly, the panel will discuss international convergence of accounting standards and the implications of moving the U.S. toward adoption of International Financial Reporting Standards (IFRS). They will also talk about what steps are necessary to ensure a successful transition to IFRS; how this transition will provide better information to investors; and progress made by the FASB and the International Accounting Standards Board (IASB) to create common accounting standards. The panelists will take email questions from viewers during the one-hour event, which begins on January 8th at 10:30 EST. The webcast will be archived on the FASB website for public access. To register for the live and/or archived webcast, click here.
At its last meeting in November, the FASB also updated its Financial Statement Presentation Project, a joint effort with the IASB to “establish a common, high-quality standard for presentation of information in the basic financial statements.” The latest summary of Phase B is here. The Boards still anticipate releasing a draft discussion document during the second quarter, 2008.
Appraisal Institute appoints new board members,
and 2008 USPAP now available
Last week The Appraisal Foundation (TAF) announced the following appointments to the Appraiser Qualifications Board (AQB), with terms commencing January 1, 2008: Chad Campbell of Seattle, WA (two years); Jeffrey LaGrew of Versailles, KY (one year); Wayne Miller of Tampa, FL (three years). Current AQB members Gary Taylor and Scott Seely will serve as 2008 Chair and Vice Chair, respectively. The following appointees to the Appraisal Standards Board (ASB) will also start January 1, 2008: Richard Borges of Seymour, IN (three years); Sandra Guilfoil of Olympia, WA (two years) and Richard Knitter of Oak Brook, Ill. (two years). Guilfoil will serve as 2008 Chair and Paula Konikoff as the 2008 Vice Chair. None of the new appointees appears to have a specific expertise in business valuation.
TAF also just released the latest edition of Uniform Standards of Professional Appraisal Practice (USPAP), effective for 2008 and 2009, the first to be published in a 24-month cycle. The new edition also merges standards and ASB guidance in one document, including USPAP Advisory Opinions and USPAP Frequently Asked Questions (FAQs), the latter featuring a compilation of more than 200 questions and answers. The cost for the 2008 USPAP is $50.00, and is available here.
Best practices for valuation for financial reporting. Earlier this year, TAF also formed working groups to begin drafting a series of best practices related to valuation for financial reporting. The first group has nearly finished Best Practices for Intangible Assets: Calculation of Contributory Asset Charges and Economic Rents, and will release a discussion draft in early 2008 for public comment, followed by an exposure. In early 2008, a second group will begin working on a draft of best practices as they relate to valuing client relationships.
BV Standards still 2007’s most passionate topic
Fair value for financial reporting and tax affecting now share top billing for the “most important BV topic of 2007,” according to our annual BVWire™ survey. Compare that to last year’s poll, in which only 6% of respondents believed that fair value for financial reporting was the most important issue, while 40% thought that tax affecting was the hottest topic of 2006. This year, IRS issues declined from 35% of the vote in 2006 to 14.6% in 2007, perhaps ceding ground to the newcomer: 14.6% of respondents saw BV Standards as the most important issue of the year. Survey comments show that this topic continues to elicit the most passion among practitioners. “We need a unified DOMESTIC set of valuation standards,” says one, with emphasis:
To turn the problem over to the IVSC without a domestic benchmark is like turning over the creation of GAAP to the IASB without GAAP in place in the U.S. The governing body… farthest away from that which it governs is the most bureaucratic, the least responsive, the most corrupt, and the most expensive. Exhibit A: Congress. Exhibit B: the U.N.
“I don't consider myself an accountant,” says another. “I'm a financial analyst who values private companies for a variety of purposes. If the BV appraisal profession is going to survive as a relevant and independent group, our BV professional associations need to work together and take on the leadership role in all valuation issues.” Currently, that leadership lies with the FASB and the AICPA, this commentator says. “SFAS 157 and [SSVS-1] are both shots across our bow that have yet to be answered.”
Don’t forget small business concerns. Two-fifths of this year’s respondents are focused on the “bread and butter” issues of business valuation. “I deal only with small businesses,” says one, “and the S Corp tax affecting issue has the biggest impact on my practice.” “I deal with VERY small companies,” says another. “I am not convinced that status has any significant impact on value.” Along these lines, 12.2% of respondents believed that discounts, premiums, cap rates and other analytical issues continue to be important BV topics, while 4.9% referred to “other” topics—including one who voted for “all of the above!”
Over 200 IPOs in 2007
As of December 14, 2007, there were 209 initial public offerings (IPOs) posted during the current calendar year. According to IPOScoop.com, 111 of these IPOs were priced upward over the year, while 96 have been priced downward and 2 remained unchanged. These totals are only a slight improvement over 2006, which saw 199 IPOs posted during the year.
Valuation Advisors, LLC has captured information on 107 of the 2007 IPOs and in 2007 added 358 pre-IPO transactions to the Valuation Advisors’ Lack of Marketability Discount Study™. The database—which now includes 3,728 total transactions—is a critical source for deriving an empirically based discount for lack of marketability. For more information, visit Valuation Advisors’ Lack of Marketability Discount Study™ at BVMarketData.com.
AICPA expands its five-day ‘National BV school’
After selling out two flagship courses in 2007, the AICPA will offer four dates next year for its National Business Valuation School: May 5-9 (New York City), June 23-27 (Phoenix), July 14-18 (Atlanta), and August 18-22 (Dallas). The course covers all aspects of BV for CPAs who wish to sit for the ABV exam—though many applicants may take advantage of the test-refresher courses offered before each exam date. Other AICPA training opportunities include web seminars on the Pension Protection Act, EDGAR On-line, SSVS Compliance, and E-discovery, with more titles planned for 2008. Visit the BVFLS website.
In its continuing efforts to “build community among ABVs,” according to Kevin Yeanoplos, who spoke at the annual ABV Town Hall Meeting at the AICPA national BV conference in New Orleans last month, the Institute will also extend its mentoring program for the coming year. The program links new or mid-level staff with senior appraisers from different regions of the country—which reduces the likelihood that mentor and mentee will “face each other in court” or create competitive problems. To read more about the program and/or apply, click here. There are now approximately 2600-2700 ABVs, including 800 who received their certifications as part of the “sponsoring” program (see BVWire #51-2). An additional 165 candidates sat for the latest ABV exam, of which, historically, 75% will receive certification.
Vail posts 100 inches of snow—and hosts 500 attorneys
Skiers are reporting waist-deep powder in the back bowls and slopes of Vail, Colorado—which will also play host to over 500 of the top attorneys and business appraisers from around the country at this year’s Law Education Institute’s annual “Business Valuation Forensic and Litigation Services Program,” January 4-9, 2008. Join Ron Seigneur, Cindy Collier, Nancy Fannon, Tom Hilton, Gail Markham, Bill Kennedy, Thomas Burrage, and others for the second running of the business valuation track (from beginners to advanced) right alongside the full legal curriculum. For more information, go to www.lawedinstitute.com.
If value (like beauty) is in the eye of the beholder, than we at BVResources have been truly fortunate to watch the business valuation profession—and its many practitioners—continue to grow in sophistication, specialization, and contributions to the related legal, financial, and accounting fields. We wish all our friends in the expanding BV community a warm and happy holidays. May the coming New Year bring many opportunities for continued advancement to all. We’ll be taking a brief hiatus for the holidays, and—except for any late-breaking news—will resume regular publication on January 9, 2008.