BV firms’ plans for raises and bonuses—is it enough?

The majority (73%) of business valuation firms polled say they will give out raises of between 3% and 5% for 2025, according to last month’s Two-Minute Practice Survey. About a quarter (27%) will dole out 3%, and a third will hand out 5% raises, with 13% giving 4% for 2025. The remainder of the respondents were equally split at lower or higher than the 3%-to-5% range.

Just average: The typical range that is planned appears to be on par with expected staff raises overall. For example, World at Work finds that median salary budget increases are expected to be 4.0% for all employees in 2025. A survey by The Conference Board of large employers suggests that 2025 salary budgets are expected to increase an average of 3.9%.

The BV profession is experiencing a shortage of talent, so salary increases that track the overall labor market may not be enough to attract or keep good people. One respondent to the BVWire survey noted that experienced team members at his firm are leaving and joining competing firms because compensation is not keeping up.

Bonuses: Almost 90% of BV firms polled say they will give out bonuses for 2024, with just a third saying the amounts will be higher than in 2023. About half (47%) say the bonuses will be the same or lower than in 2023.

Our thanks to all of you who participated, and we’ll have another survey in next week’s issue.

Wife foregoes valuation expert to her dismay

Here’s another case where one party in a divorce matter does not offer a competing valuation and then appeals the outcome. The case is in Arizona, and the husband engaged a valuation expert to value his osteopathic practice. The wife did not offer an expert valuation, and, when the court accepted the valuation of the husband’s expert, the wife appealed.

No avail: The wife contended that the husband’s expert was not credible, even though she had the Accredited in Business Valuation (ABV) credential from the AICPA. Without any evidence of not being credible, the appellate court disagreed. Also, the trial court did not “abuse its discretion” because it declined to “speculate on the value” of the business and instead relied on the expert’s opinion. The trial court’s opinion was affirmed.

The case is Marouk v. Marouk, 2024 Ariz. App. Unpub. LEXIS 935, and a case analysis and full court opinion are available on the BVLaw platform.

AICPA releases final business combinations guide

The AICPA has released the final Accounting and Valuation Guide—Business Combinations, which provides guidance and illustrations regarding the accounting and valuation considerations for business combination transactions. It addresses many accounting and valuation issues that have emerged over time and will help preparers, auditors, and valuation specialists understand and comply with the requirements of FASB ASC 805, Business Combinations, and FASB ASC 820, Fair Value Measurement.

Key point: We’ve heard comments at conferences and webinars that the new guide has not widely changed practice in this area and that there were no real changes from the exposure draft. However, we point out that while the changes were not groundbreaking, there were enough changes to demand attention. For firms that have already implemented the best practices in the guide, the final version should not have any material impact. But for those firms that have not done so, they need to pay particular attention to the final version.

This item has been revised to clarify the extent and nature of the changes made to the guide’s exposure draft.

Stout issues Q4 2023 PPA study

Stout has released its Purchase Price Allocation (PPA) Study, based on an analysis of 130,417 filings and 5,203 transactions, highlighting the valuation of intangible assets and goodwill as a percentage of enterprise value. This review of 10-K and 10-Q filings examines key components of purchase price allocation, including goodwill, intangible assets, and contingent consideration, offering benchmarks to evaluate the strategic allocation of intangible assets. Key findings include:

• For Q4 2023 transactions, goodwill represented 47.5% of enterprise value on average, demonstrating its growing significance in M&A valuations;

• Less than a quarter (23.3%) of Q4 2023 transactions included contingent consideration, averaging 15.7% of enterprise value, indicating an increasing trend toward performance-driven M&A negotiations; and

• Goodwill as a percentage of enterprise value increased in several sectors, including energy, healthcare, industrials, and information technology, underscoring its role in value determination across industries.

Special year-end offer on BV workflow tool

If you’re struggling with converting hard copy tax returns to Excel, check out the TaxXL tool. Developed for business valuation professionals by Nambri, TaxXL converts PDF tax forms to Excel spreadsheets fast and accurately.

Limited offer: Nambri would like to offer an 18-month subscription for the price of 12 months for subscriptions purchased in December. To receive the special price, contact your BVR account manager, call 1-503-479-8200, or email sales@bvresources.com.

You can learn more about TaxXL if you click here.

Tomorrow! ASA Winter Fair Value Conference

Insights into the newly released AICPA Accounting and Valuation Guide—Business Combinations highlight the ASA Fair Value Conference, which will be held tomorrow, December 5. This is a half-day event, and it is virtual only. Conference chair Ray Rath (Baker Tilly US LP) has put together a fine agenda that also includes an ASC 360 panel, calibration, company-specific risk premiums, and an update on intangible asset discount rates. Up to 4.5 hours of ASA CE and CPE credits are available. For more details and to register, click here.

Preorder deal on the updated Business Reference Guide for 2025

The 2025 edition of the Business Reference Guide (BRG) is now available for preorder at a discounted price if you click here. But you need to order by December 31 to get the discount. Now in its 35th year, it contains the latest industry-related information including rules of thumb, pricing tips, benchmarking information with comparison data, industry resources, and general industry data on over 800 types of businesses. There is also an online version with a fully searchable database, and it includes the print version of the guide.

Next week! NACVA Super Conference in Las Vegas

BVWire will attend the NACVA and the Consultants’ Training Institute’s 2024 Business Valuation & Financial Litigation Super Conference December 12-13 at the MGM Grand in Las Vegas. There will be four tracks and almost 40 sessions, plus a full-day preconference program. There will be several sessions on artificial intelligence and automated valuation models for valuation and forensics, including a perspective from the courts. Of course, there are many more sessions and there will be something for everyone. You can attend in-person or virtually, and there is an á la carte option for virtual attendees. For details and to register, click here.

IVSC seeks board members; deadline is December 16

The International Valuation Standards Council (IVSC) is seeking applications for roles on its Standards Review Board and three subject matter-specific boards, covering business valuation, tangible assets, and financial instruments. Applicants should have extensive expertise in valuation, ESG, and international perspectives, “ensuring a broad representation of skills and geographies.” The new board appointees will start their terms in the second quarter of 2025. Applications can be submitted online through the IVSC website, and the closing date for applications is December 16. For more information, click here.

Extra: There is also an opening for a director to lead the IVSC’s newly established Middle East and Africa (MEA) office, based in Riyadh, Saudi Arabia. To apply, click here. Application deadline is December 20.

BV movers . . .

People: Jake Helwick, ASA, has been promoted to director at Grand Rapids, MI-based Adamy Valuation; he specializes in valuation and financial advisory services relating to tax reporting, equity incentive plans including ESOPs, financial reporting, economic damages, business interruption, transaction opinions, succession planning, corporate strategic planning, and other unnoted litigious matters across a multitude of industries … Damien Hughes, MBA, MS, PE, has joined New York City-based Anchin as director in the firm’s Valuation and Financial Advisory Services practice; he has over 23 years of experience in business valuation, financial, and transaction advisory services; his expertise encompasses the valuation of diverse assets, including portfolio investments, equity securities, corporate debt, and intangible assets.

Firms: New York City-based PKF O’Connor Davies has announced a strategic growth investment from Investcorp, a global alternative investment firm, and Public Sector Pension Investment Board, one of Canada’s largest pension investment managers … Enterprise, Ala.-based Carr, Riggs & Ingram LLC has received a strategic investment from funds advised by affiliates of Centerbridge Partners LP, a global alternative investment manager, and Bessemer Venture Partners, a venture capital firm … New York City-based Citrin Cooperman is acquiring Clearview Group, a Baltimore metro-based management consulting and CPA firm, a deal that adds 10 partners and over 150 professionals; the PE firm New Mountain Capital owns a majority stake in Citrin Cooperman … Vancouver, Wash.-based Opsahl Dawson & Co. Advisors LLC has added Hauser Jones & Sas, which expands the firm to four offices with a team of 180 partners and professionals.

Please send your professional and firm news to us at editor@bvresources.com.

CPE events

Understanding DealStats: What You Need to Know (FREE WEBINAR), December 11, 10:00 a.m.-11:15 a.m. PT/1:00 p.m.-2:15 p.m. ET. Featuring: Adam Manson (Business Valuation Resources) and Oday Merhi (Business Valuation Resources). CPE credits: 1.5.

Are you aware of the newest enhancements to DealStats? The speakers will cover them and include a background on the resource, such as the data sources DealStats uses, how the data are reviewed and vetted, and what benefits the database can provide.

Ethical Issues in Business Valuation—December 2024, December 12, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: R. James Alerding (Alerding Consulting) and John Barrett Jr. (Barrett Valuation Services Inc.). CPE credits: 2.0.

The speakers will cover a broad range of ethical topics, from review of BV standards relating to ethics to examples of ethical issues in practice, as well as a section discussing ethical issues relating to artificial intelligence (AI).