BVR Logo December 18, 2019 | Issue #207-3

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

Noteworthy highlights of the year in BV
for 2019

It was a notable year for the business valuation profession in 2019, and BVWire was on the scene each and every week covering all the important developments. As we wrap up our last issue of 2019, let’s look back at some highlights:

  • Two momentous court decisions emerged in 2019 that may be a lasting victory for tax affecting pass-through entities: the Kress case (federal district court) and the Estate of Aaron Jones case (U.S. Tax Court).
  • Valuation professionals have serious concerns over the FASB mulling the idea of moving from goodwill impairment back to amortization or a hybrid approach; over 100 comment letters were received on an Invitation to Comment, and the International Valuation Standards Council (IVSC) weighed in with a paper saying that goodwill is not a wasting asset.
  • In a key ruling on entity goodwill,, a Washington appeals court ruled that a professional limited liability company (PLLC) can have goodwill separate from the goodwill of the professionals.
  • BVR released its landmark research on valuation firms’ profit drivers and successful practice management strategies.
  • The Duff & Phelps Cost of Capital Navigator went head-to-head with the new kid on the block, BVR’s Cost of Capital Professional. The results using a hypothetical company: Both platforms gave similar estimates of the cost of capital.
  • Sir David Tweedie stepped down as chair of the IVSC after making significant accomplishments; over 100 countries have now adopted the group’s International Valuation Standards (IVS).

That’s just some of what happened in BV in 2019. We would like to thank all of our readers for being with us during the year, and we wish all of you a very happy holiday season. We’ll see you in 2020!

Supreme Court reviews damages issue in trademark infringement case

The U.S. Supreme Court is about to hear arguments in a trademark infringement case that turns on whether the plaintiff, in order to obtain the infringer’s profits, has to show willful infringement by the defendant. Courts of Appeals are currently split on whether willfulness is a precondition under the applicable section of the Lanham Act, which deals with trademark violations.

The plaintiff is Romag Fasteners Inc., a family business based in Connecticut that sells patented snap fasteners under a registered trademark. The defendant is Fossil Inc. It designs, markets, and distributes fashion accessories. It does not manufacture products but has contracts with overseas factories. Fossil and Romag had an agreement that Fossil would use Romag’s fasteners in its products. Later, Romag discovered that certain Fossil products (handbags) used counterfeit snaps that bore Romag’s trademark.

Romag sued Fossil and Fossil retailers (including Macy’s) in the District of Connecticut for patent and trademark infringement. It asked for injunctive relief and monetary damages, including an accounting of the defendants’ profits. In 2014, a jury found Fossil liable for infringement but also found the infringement was not willful. The jury decided Fossil should pay almost $91,000 in profits “to prevent unjust enrichment” as well as about $6.7 million “to deter future trademark infringement.”

The district court ultimately found there was no basis for any award of profits because the plaintiff did not prove the infringement was willful, and, in “this” circuit (2nd Circuit), “a finding of willfulness remains a requirement for an award of defendants’ profits.” The Federal Circuit Court of Appeals affirmed the district court’s ruling. Romag then asked the U.S. Supreme Court for review, which was granted.

Case turns on statutory interpretation: The Lanham Act prohibits unfair competition, fraud, and the “deceptive and misleading use of [trade] marks.” Section 35 of the Act specifies remedies for certain trademark violations, including the plaintiff’s right to the defendant’s profits (besides actual damages and attorney’s fees). The way the applicable section (15 U.S.C. § 1117(a)) is worded leaves it unclear whether the remedy of infringer’s profits requires a showing of willful infringement for only one type of infringement (section 1125(c) violation) or in all infringement actions.

Not only have the Courts of Appeals in different circuits reached different conclusions, legal scholars and various IP groups have disagreed over how to interpret this section within the context of the Lanham Act, the Act’s legislative history, and public policy.

Romag has argued that it is critical for practical and policy reasons that the high court resolve this issue. Romag contends the circuit split means that, depending on where a case is adjudicated, the plaintiff gets or does not get the infringer’s profits based purely on willfulness, without the court’s analyzing any other factors. Romag also says that a plaintiff’s actual damages are often difficult to measure, making disgorgement of the infringer’s profits in many cases the “only meaningful monetary relief that trademark owners can secure for infringement.” This was the case here. Also, the remedy of infringer’s profits would give the plaintiff and the public at large some protection against counterfeit and falsely marked goods.

Fossil has argued against review by the Supreme Court. As Fossil sees it, infringer’s profits are an equitable remedy and all courts in some way consider willfulness to be an important factor in their damages determination. Some courts do so expressly by making disgorgement a prerequisite, and others do so when balancing the equities. “There is no meaningful conflict among courts of appeals,” Fossil has said.

Oral argument in the Supreme Court is set to take place on Jan. 14, 2020.

To read the parties’ briefs, click on the link here.

A/E industry flying high

“Fueled by a national economic expansion that appears to have no limits, the A/E [architectural/engineering] industry is undoubtedly finishing this decade exhibiting some of the highest levels of confidence, optimism, and growth that we can recall,” says a report from Rusk O’Brien Gido + Partners. Today’s landscape in this industry has turned “180 degrees” from the recessionary depths of 10 years ago. Trends include continued industry consolidation, increased private equity involvement, baby-boomer owners bent to sell, more M&A deals, and more effective integration of combined firms. Rusk O’Brien Gido + Partners produces the Architecture and Engineering Business Valuation and M&A Transaction Study, now in its 6th edition, which contains the latest transactional data from distinct stock transactions along with supplemental data from publicly available sources.

CBV Institute releases exciting research on cryptoassets

One of the highlights of the ICVPME 11th International Conference in New Zealand was a session, “Decrypting Crypto,” presented by Tara Singh and Tylar St. John of the CBV Institute, a Canadian valuation professional organization (VPO). They have done some research in this area and gave an excellent summary of cryptoassets, clarifying the various abbreviations and terminologies for attendees. The speakers presented results from the research, which, at the time, was being reviewed prior to publication. The research has just been made available, and we hear it’s generating a lot of interest north of the border, which should quickly spread globally. The study investigates valuation approaches and trends among Canada’s 32 publicly traded companies with cryptoasset holdings or crypto-related revenues. Although there is a dearth of reporting guidance for this emerging asset class, the “majority of Canadian public companies appear to have applied a principles-based approach to financial reporting for cryptoassets, meaning these companies sought direction from a number of different reporting standards in an effort to classify cryptoasset holdings according to the anticipated use-case in their respective business operations,” the study says.

“One of CBV Institute’s mandates is to continually adapt and evolve the CBV profession to the forefront of business change; understanding cryptoassets and valuation approaches is now imperative in our industry,” says Mary Jane Andrews, CBV Institute president and CEO. “We look forward to releasing this study and mobilizing our professionals in Canada and internationally to start considering important valuation approaches for this new asset class.”

The study, “Decrypting Crypto, an Introduction to Cryptoassets and a Study of Select Valuation Approaches,” has been published in the CBV Institute’s Journal of Business Valuation.

IACVS and KPCG link cooperation deal

The International Association of Certified Valuation Specialists (IACVS) and the Chamber of Appraisers of Montenegro (KPCG) reached a cooperation agreement in November 2019. The two groups will work together in all aspects of member benefits (such as reciprocity) and education opportunities. IACVS prexy William Hanlin and KPCG chair Slavko Rakocevic talked about the idea during the IVSC Singapore World Council Meeting in October 2019 and recently agreed to terms. For additional information, contact IACVS Headquarters ( or KPCG Headquarters (

The study, “Decrypting Crypto, an Introduction to Cryptoassets and a Study of Select Valuation Approaches,” has been published in the CBV Institute’s Journal of Business Valuation.

Preview of the January 2020 issue of Business Valuation Update

Here’s what you’ll see:

  • Business Valuation Year in Review 2019” (BVR Editor). A look back at some of the developments in the BV profession in 2019, including important court rulings on tax affecting pass-through entities, a possible upending to the goodwill model, a new cost of capital platform gaining traction, and advances in fair value for financial reporting.
  • 2019 Key Valuation and Damages Cases” (Sylvia Golden). A discussion of the court cases that have dominated the conversation in 2019 among financial experts by making law or influencing attitudes on key valuation issues.
  • Valuers and Bankers: Benefits of Cross-Training Between the Professions” (David Shindel, ShindelRock). When underwriting loans, bankers appraise business assets from a different angle than valuation experts. These differences should be identified and utilized as a learning tool to provide a deeper understanding of the data used for the benefit of both professions.
  • New Guidance in the IVS Update Effective Jan. 1, 2020” (BVR Editor). More than 100 countries have adopted the IVSC’s International Valuation Standards. Important components of the extensive recent update include guidance on deriving discount rates and a new section on complex financial structures.

The issue also includes:

  • An expanded section of “BV News and Trends/Global BV News and Trends.”
  • Regular features: “Ask the Experts” and “Tip of the Month.”
  • BV data spotlight: “DealStats MVIC/Revenue Trends,” “FactSet Mergerstat/BVR Control Premium Study,” “Economic Outlook for the Month,” and the “Cost of Capital Center.”
  • BVLaw Case Update: The latest court cases that involve business valuation issues.

To stay current on business valuation, check out the January 2020 issue of Business Valuation Update.

BV movers ...

People: Adam Hill, ASA, has been promoted to managing director in advisory services at Chicago-based Crowe LLP, where he serves as a leader in the tangible asset valuation services group … Joseph C. Ledford, CPA/ABV, CVA, CEPA, and Keith A. Veres, CPA, CGMA, CEPA, both with Canfield, Ohio-based HBK CPAs & Consultants (HBK), have earned the Exit Planning Institute’s Certified Exit Planning Advisor (CEPA) designation; Ledford is in the firm’s Meadville, Pa., office, and Veres is in Fort Myers, Fla.

Firms: Columbus, Ohio-based Clarus Partners merged with Carmel, Ind.-based Blue & Co.; the combined firm will operate as Blue & Co. and will have a staff of more than 450 professionals in 11 offices across Indiana, Ohio, and Kentucky … Indianapolis-based Caskey & Daily PC has joined another Indianapolis firm, Katz, Sapper & Miller (KSM); the former’s staff will move to KSM’s Indianapolis office … On Jan. 1, 2020, Irvine, Calif.-based Squar Milner LLP will add the accounting practice of Arnold Zippel, who operates a law and accounting firm in San Francisco, with both practices focusing on estates and trusts; the newly combined offices will result in over 130 professionals representing Squar Milner in the San Francisco region … New York-based Friedman will add Markowitz Fenelon & Bank (MFB) on Jan. 1, 2020; MFB operates two offices in Bridgehampton, N.Y., and Riverhead, N.Y., and this deal brings the total number of Friedman locations to 13 and the firm’s roster of partners and staff to about 600, including the MFB team of approximately 40 … Barone Howard & Co. CPAs, with offices in New Hartford, N.Y., and Rome, N.Y., has merged with Syracuse, N.Y.-based Dermody Burke & Brown; the combined firm operates under the latter’s name and has more than 90 professionals … Bloomfield Hills, Mich.-based Cendrowski Corporate Advisors (CCA) has joined Geneva Group International (GGI), which has 605 members representing 817 offices in more than 120 countries … Salt Lake City-based Haynie & Co. has acquired two firms: Hales-Bradford of Brownsville, Texas, and W. Hamilton & Co. of Austin, Texas.

Please send your professional and firm news to us at

Upcoming BVR training events

  • Valuation for Small Business Administration Loans (December 19), with David Coffman (Business Valuations & Strategies PC).

    The discussion covers when SBA valuations are required, who are considered qualified sources of business valuations, how SBA valuations differ from other engagements, and more.

  • Applications of the Asset-Based Approach to Value Operating Businesses (Jan. 9, 2020), with Weston Kirk (Willamette Management Associates) and Robert Reilly (Willamette Management Associates).

    Most valuation analysts rarely apply the asset-based approach for going-concern companies, but it should be used under certain circumstances. This discussion describes when to use the asset-based approach and how to apply it to an operating company.

After taking time off for the holidays, BVWire will be back on Wednesday,
Jan. 8, 2020. We wish you a safe, joyful, and prosperous holiday season!

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

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