January 11, 2012 | Issue #112-2  

Yet another BV credentialing body?

Mark Boulanger
(Raiche and Co.) was recently reviewing an “opinion of value” by an individual with a credential that Boulanger had never come across before. “Can anyone point me to a website for the National Society of Business Opportunity Appraisers?” he asked members of the BV Professionals discussion group on LinkedIn (membership required). “What is that organization? How does it compare to the IBA, NACVA and ASA?”

Replied Ray Springer (Springer Appraisal & Consulting): the National Society of Business Opportunity Appraisers, in association with American Business Consultants Inc.(ABC), may grant the Certified Business Opportunity Appraiser (CBOA) credential. In fact, ABC appears to be more a private business than a professional membership society, pointed out Ed Heben (Citrin Cooperman & Co.). A quick Google search turns up the CVs of several individuals boasting the CBOA credential. There’s also a web site that posts a certificate along with a web page that touts the use of a valuation method “based on the one used by the Society of Certified Business Opportunity Appraisers,” which has been “refined, fine-tuned, database-driven, computerized, and extensively tested to insure that the results are ‘Real World’ not just a number based on a ‘Rule of Thumb’ or some financial index or ratio.” 

“Not sure how much weight the CBOA holds in relation to the others,” Boulanger remarked, in closing. Other continuing discussions by the BV Professionals group include a query by Ashok Abbot (Univ. W. Va.) asking for current economic inputs, and a thread on valuing and allocating professional goodwill using MUM. Tax affecting is another topic, along with an article posted by Lari Masten (Masten Valuation) on how BV report writing may be suffering from an “epidemic” of “expertese.”

Top 2011 downloads: a snapshot of BV issues & interests

By far the most popular free download from BVR this past year was the IRS’s DLOM Job Aid, followed by another tax-centered topic, a copy of the Tax Court’s Gallagher decision (see table below). Recent updates to the Goodwill Hunting Guide illustrate the continuing interest in this complicated topic, as does number six on the list, on factors influencing personal goodwill allocations in selected case law. For the complete, current list of complimentary resources, visit the BVR free downloads page.

This year, look for future updates to perennial favorites, such as new excerpts from Mergerstat and transactional databases as well as just-published downloads on IRS and tax-related topics, such as the long-anticipated revised FLP appeals guidelines and any guidance on qualified appraisals/appraisers. We’ll continue to offer the latest “landmark” valuation cases as well as regulatory and industry overviews. If there’s any particular download that you’d like to see in 2012, please email the BVWire editor.

Download Title


Discount for Lack of Marketability Job Aid for IRS Valuation Professionals


Estate of Gallagher v. Commissioner, T.C. Memo. 2011-148 (June 28, 2011)


Goodwill Hunting in Divorce


The Generous Helping of Company-Specific Risk That May Already Be Included in Your Size Premium


Economic Outlook Update Monthly - December 2010


Examples of Factors Implementing Personal Goodwill in Cases


How Much Is Your Business Worth - According to Inc. and BVR


Duff & Phelps Risk Premium Calculator - Cost of Equity Estimates


Excerpts from 2011 Mergerstat Review


Control Premiums: Application & Analysis Special Report Excerpt


BV standards already in close conformity, say industry leaders

We’ve heard from various sources that top BV experts and representatives are considering how to formulate a response to the SEC’s recent call for “unification” of the BV profession and its standards. In the meantime, we are reminded of the article by Nancy Fannon (Fannon Valuation Group), Mark Hanson (Schenck Valuation and Litigation Support), and Edward Dupke (Clifton Gunderson), in the May 2011 BVUpdate, “Let’s Build on the New NACVA/IBA Standards Unification,” in which the authors state:

A conscious effort was made by NACVA and by IBA to have their common professional standards be in conformity with SSVS1. It is our belief that the unification and resulting conformity with AICPA will enhance clarity for both preparers and users of valuation reports. If a valuation analyst adheres to either of these two sets of professional standards in performing the valuation or calculation engagement, then the valuation analyst will likely be in compliance with both sets of standards.

“On the positive side, the similarity of the NACVA/IBA valuation standards and the AICPA valuation standard is a testament to the efforts these organizations have made in the development process,” the authors conclude. “Such efforts provide strong encouragement for the valuation profession moving forward.”

In a follow-up article, “AICPA, NACVA, and IBA (at Least) Unify Standards,” in the July 2011 BVUpdate, Mark Kucik (Kucik Valuation Group) lauds the BV professionals who led the unification effort. “Ultimately, at the end of the day, the principals of the AICPA, NACVA, and IBA have come together,” he says, with a reminder that NACVA has posted the updated standards.

Will you network this year, or network effectively?

“I’ll bet most of us engage in some form of networking as part of our business development efforts. But do we do this effectively?” asks Rick Warner (Great Lakes Valuation), editor of the ASA E-Letter, in his most recent missive to members. “Networking is easy. Networking effectively is much more challenging,” Warner says. Not only does effective networking lead to real business development results, but its true hallmark is “helping our networked partners to be effective in their businesses.” If this doesn’t characterize your networking, then all your efforts may merely amount to “activity,” Warner says, who reminds BV appraisers:

  • When you do help your networking partners, “it doesn’t need to take the form of a referral for an engagement, although those are certainly desirable. Helping can be as simple as providing an introduction to another professional in your network who might be a good connection for another networking partner.”

  • Be persistent in your networking efforts; don’t attend one or two meetings and then expect to see the “referrals rolling in,” Warner says. “Get to know the individuals who are in the group. Referrals are made between individuals. You’ve got to know the people in the group at an individual level.”

PE is flat, M&As and IPOs are down, but muni-bonds look good

A current roundup of year-end 2011 market reports reveals the following:

  • This past year trailed 2010 in deal activity for private equity (PE) investment, says a new PitchBook update, “but it was still a marked improvement over 2009 and left the industry poised for strong future activity.” In 2011, 1,630 PE deals were completed in the U.S., down 10% from the 1,807 deals in 2010, but up 19% from the 1,375 deals in 2009. In 2011. PE transactions invested over $144 billion in U.S. companies; during the same time, 415 PE deals saw an exit (through a sale or IPO of a portfolio company), the fourth-highest yearly total. For more analysis of the PE world, PitchBook will release its annual “Private Equity Breakdown” (2012) next week.

  • Despite a flurry of sales in the last quarter, only 52 venture-backed companies went public during 2011, a 31% decline in IPO volume compared to 2010, says a new report from Thomson Reuters and the National Venture Capital Association (NVCA). IPOs raised nearly $2.6 billion in cash in 4Q2011—or nearly five times the amount raised in the previous quarter, but a 34% drop from 4Q2010.

  • Merger and acquisition activity also fell by 34% in 2011, according to the Reuters/NCVA report. Other sources, such as the mergermarket M&A Roundup for Year-end 2011, report a slight uptick (2.5%) in global M&A activity along with a strong year-end surge of domestic M&A deals.

  • Municipal bonds returned an average 10% in 2011, outpacing equities and other asset classes, says a year-end survey by InvestmentNews (free registration). The muni-bond market may continue to do well in the coming year, assuming the continued suppression of interest rates as well as economic growth.

Last chance to hear Comment’s comments on DLOM

Don’t miss the next BVR webinar, tomorrow, January 12, when Professor Robert Comment (Johns Hopkins Univ.) presents Why Your DLOM Is Vulnerable to a Daubert Challenge,

New Year, new training from BVR. BVR’s 2012 Online Symposium on Healthcare Valuation kicks off on Thursday, January 24, with Economic & Regulatory Update in Healthcare Valuation. Featuring series curator and AHLA/BVR Guide to Healthcare editor Mark Dietrich, this first symposium installment examines how current market and legislative forces are changing the landscape of the healthcare industry and what the new economic and regulatory environment means for healthcare valuations in the coming year.

The symposium will then continue with 11 monthly webinars focusing on the evolving body of knowledge in healthcare valuations: from hospitals and dental practices to specialized providers and centers to medical practice valuations for divorce. Symposium subscribers have access to the Healthcare Desktop Learning Center, an online library of all BVR healthcare programming since 2004, including the entire 2011 Symposium. For more information or to sign up, click here.

Six FASB proposals await comment in 1Q2012

The following six exposure documents from the FASB are now open for public comment—and all with deadlines before the close of the first quarter, 2012:

  1. Proposed Accounting Standards Update—Consolidation (Topic 810): Parent’s Accounting for the Cumulative Translation Adjustment upon the Sale or Transfer of a Group of Assets that Is a Nonprofit Activity or a Business within a Consolidated Foreign Entity (a consensus of the FASB Emerging Issues Task Force); comments due Feb. 6, 2012;

  2. Proposed Accounting Standards Update—Real Estate—Investment Property Entities (Topic 973); comments due Feb. 15, 2012;

  3. Proposed Accounting Standards Update—Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements; comments due Feb. 15, 2012;

  4. Proposed Accounting Standards Update—Consolidation (Topic 810): Principal versus Agent Analysis; comments due Feb. 15, 2012;

  5. Proposed Accounting Standards Update (Revised)—Revenue Recognition (Topic 605): Revenue from Contracts with Customers; comments due March 13, 2012; and

  6. Proposed Accounting Standards Update—Revenue Recognition (Topic 605): Revenue from Contracts with Customers—Proposed Amendments to the FASB Accounting Standards Codification; comments due March 13, 2012.

For copies of the current FASB exposure drafts and comment feedback forms, click here.

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Copyright © 2012 by Business Valuation Resources, LLC
BVWire™ (ISSN 1933-9364) is published weekly by
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