BVR Logo January 6, 2021 | Issue #220-1

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

Comments wanted on revised global BV glossary

A draft of a revised international glossary of business valuation terms has been developed, and feedback is wanted on the terms included and their definitions. The draft is a result of the collaboration of the ASA, AICPA, RICS, TAQEEM, and CBV Institute. Public comments are due January 31, and the document, titled International Valuation Glossary—Business Valuation, can be found if you click here. Comments can be submitted if you click here, but the AICPA has asked its members to provide feedback directly to Mark Smith, senior manager of the AICPA’s FVS section, via email at

Key point: The revised glossary will be made part of official standards, and it contains technical terms and methodologies, a number of which have emerged since the prior version (published in 2001). Some practitioners we spoke with are worried that this could create a problem, especially in a litigation context. For instance, you might get this question related to a new glossary entry: “Did you use or consider the Greenfield method in your valuation analysis?” If you answer “no,” the next question you’ll get is “Why not? It’s in your professional standards.”

It may be better to promulgate the revised glossary in nonauthoritative form, such as an advisory or practice aid.

Vinoskey reply brief refutes DOL’s stock value and control claims

Argument continues in the contentious Vinoskey ESOP litigation, which is now in the 4th Circuit where the remaining defendant, Adam Vinoskey, has appealed the district court’s liability and damages findings. Vinoskey recently filed a reply to the Department of Labor’s defense of the court’s decision in which he discredits the DOL’s valuation-centered contentions.

As we reported earlier, at issue was a 2010 transaction in which Vinoskey and his late wife sold the remaining 52% of stock in their company to an ESOP for $406 per share. Appraisals in the five years preceding this transaction ranged from $215 per share to $285 per share in 2009. The crux of the district court’s ruling was that Vinoskey was a knowing participant in the independent trustee’s ERISA violations and was liable as a co-fiduciary for failing to remedy the trustee’s breaches. The trustee caused the plan to overpay for company stock, and Vinoskey, the selling shareholder, accepted the price knowing it was inflated.

Post-judgment, the DOL and the trustee settled, but Vinoskey appealed the findings.

Arm’s-length deal: In its response brief, the DOL claimed Vinoskey, who was a named fiduciary of the ESOP, was liable as a fiduciary concerning the 2010 transaction. He also was liable as a co-fiduciary because he failed to make reasonable efforts to remedy the trustee’s breaches. He “did nothing to protect his employees’ interests in the 2010 Transaction.” Vinoskey’s reply brief counters that he removed himself from the decision-making process underlying the transaction and that the company retained an independent trustee that had the authority to review and approve the transaction and that was insulated from Vinoskey’s influence. Vinoskey did “what a prudent fiduciary selling stock to the ESOP should do,” the brief says.

“Vinoskey sat only on one side of the bargaining table and negotiated against the independent trustee, who sat on the other side.” The brief claims he wasn’t a fiduciary and cannot be liable as a co-fiduciary of the trustee’s breaches. The DOL “advances what amounts to a per se theory of liability for selling shareholders when an independent trustee causes an ESOP to overpay for company stock,” the reply brief asserts.

Valuation is forward looking: The DOL claims Vinoskey knew “there was no business reason” that justified the stock price increase from $285 per share in 2009 to $406 per share in 2010. Vinoskey’s reply brief points out that 2009 earnings were lower as a consequence of the Great Recession. It says the DOL conceded that the company began to bounce back in 2010; Vinoskey reasonably believed it would do even better in 2011 considering the large backlog of orders, which, when filled, would boost the company’s earnings.

Valuation is forward looking, the brief notes. “For valuation purposes, the question was whether, in 2010, [the company] was poised for future growth.” Vinoskey saw a promising future particularly in light of the economy’s general improvement.

Regarding the contested issue of control, the brief says a layperson likely understands what “control premium” means. However, “even a valuation professional would not know that a buyer was paying a control premium based solely on the fact that a valuation was conducted on a controlling interest basis,” the brief says. Further, the ESOP did gain control, the brief emphasizes. The transaction caused the ESOP to own 100% of the company’s voting shares, and, under the corporate bylaws, the ESOP had the unfettered right to remove the board of directors for any reason at any time.

The brief further notes that the idea that an ESOP owning 100% of a company’s voting rights might not control the company “simply did not exist until 2017, after the district court’s decision in Brundle.” This transaction took place in 2010, the brief points out.

Stay tuned for reporting on further developments in this case.

Digests of the district court’s 2019 decision in Pizzella v. Vinoskey (earlier Acosta v. Vinoskey), 2019 U.S. Dist. LEXIS 129579 (Aug. 2, 2019), and Pizzella v. Vinoskey (II), 2020 U.S. Dist. LEXIS 15464; 2020 WL 476669 (Jan. 29, 2020), as well as the court opinions are available to subscribers of BVLaw.

Send the BV ‘power panel’ a video question—and get free admission

Here’s your chance to ask any question you want, and it will be answered live during BVR’s Power Panel: Live Expert Answers for Today’s Tough BV Questions on January 14. What’s more, if you send in a video of yourself asking the question, you will get free admission to the session. The panel will consist of Jay E. Fishman (Financial Research Associates), Michelle F. Gallagher (Adamy Valuation), Ken Pia (Marcum), and Jeffrey S. Tarbell (Houlihan Lokey). To get free admission to the webinar, you must send in a question in video form by January 13.

What to do: Use your smart phone or other device and video yourself asking a question you want the panel to answer. Send the video to BVR’s training director, Jared Waters, at no later than January 13, and you’re all set. If you have any trouble doing this, contact Jared for help.

Vanguard stock market forecast implies a U.S. ERP of 3% to 5%

Annual returns of U.S. stocks over the next decade are forecasted to be in the “modest 3.7%-5.7% range,” according to a recent market outlook report from Vanguard. This implies an equity risk premium (ERP) in the range of 2.2% to 4.2%, assuming a risk-free rate of 1.5% (the 20-year T-bond spot rate at the time of this writing). The forecast of stock returns “is quite different from the 10.6% annualized return generated over the last 30 years,” the report says. Some analysts believe that the past is not reflective of the future, so they do not use an ERP based on historical returns. The ERP is a forward-looking concept based on the expected excess return on the stock market, so they use a forward-looking (“implied”) ERP. An implied ERP represents investment expectations as of a particular point in time, which is what analysts are trying to determine.

Good, free economic research from McKinsey

We hear more valuation analysts touting the free material available from McKinsey on economic and industry analyses, particularly with respect to the COVID-19 crisis. A few examples: One chart shows projected small-business recoveries by industry (click here to view), and another shows the most likely scenario for COVID-19’s impact on domestic GDP in various countries (click here to view). All of this material is free, and you can sign up for regular alerts on the McKinsey website.

Do you have a story to tell?

During 2020, it was exciting to see valuation experts rise to the challenges the pandemic created. Business Valuation Update was very fortunate to publish a good number of articles submitted by experts who presented some very interesting and innovative thinking about how to reflect the impact of the pandemic on valuations. Of course, this thinking continues to evolve, so we invite you to share your ideas and experiences with your peers and submit an article to us. No time to write? No problem—just contact us and we can help you with that! Send an email to

IVSC issues exposure draft on financial instruments

The International Valuation Standards Council (IVSC) is “eager” to hear comments on its exposure draft on a new standard for the valuation of financial instruments. This is part of the ongoing effort of the organization’s Financial Instruments Board, which was formed in December 2018. “This exposure draft represents a hugely significant evolution in the valuation of financial instruments and the IVSC is eager to hear your thoughts,” the IVSC says. Comments are due by April 19. You can find the exposure draft if you click here, and you’ll also find a form for feedback.

CBV Institute sets date for 2021 Congress

Mark your calendar for June 16-18 to attend the Interactive Virtual Congress 2021 held by the Chartered Business Valuators Institute (CBV Institute), Canada’s valuation professional organization (VPO). This event has always represented best-in-class global learning. Details are forthcoming and will appear on the organization’s event webpage.

BV movers . . .

People: Jade Palermo has joined New York-based Empire Valuation Consultants in the firm’s Boston office; she specializes in ESOP-related valuations, including new formation transactions, subsequent stage transactions, and annual updates … Daniel J. Sailer, CPA/ABV, CFA, has been named a director in the valuation services group at Indianapolis, Ind.-based Katz, Sapper & Miller; he provides business valuations for estates and gifts, succession planning, transaction advisory, employee stock ownership plans, dispute resolution, and litigation support.

Firms: CliftonLarsonAllen LLP (CLA) has added West Hartford, Conn.-based blumshapiro, bringing in more than 500 blumshapiro team members from the firm’s offices in Connecticut, Massachusetts, Rhode Island, and Virginia, thus increasing CLA’s presence in the region to more than 1,150 people; CLA now has more than 7,000 people in more than 130 locations across 31 states … Columbia Financial Advisors Inc. of Portland, Ore., has moved its office within the city from 720 SW Washington to 520 SW 6th Avenue, Suite 820; the firm is known for its ESOP valuations, tax-related valuations, litigation support, and other advisory services … Cleveland-based CBIZ has acquired BeyondPay Inc. (Clinton, N.J), a HR and payroll provider with 40 employees … Camp Hill, Pa.-based Brown Schultz Sheridan & Fritz is partnering with James Adams of BSSF Wealth, a fee-only firm providing asset management, financial planning, and estate planning services to clients in Pennsylvania and Maryland.

Please send your professional and firm news to us at

CPE events

  • Valuation of Senior Living and Post-Acute Providers. January 13, 10:00 a.m.-11:15 a.m. PT/1:00 p.m.-
    2:40 p.m. ET. Featuring: Jed Cheney (CliftonLarsonAllen LLP).

    This webinar will focus on various value drivers in this sector, including the impacts of COVID-19, provider relief funds, and other government assistance programs. This is part of BVR’s Special Series presented by the BVR/AHLA Guide to Healthcare Industry Finance.
  • Power Panel: Live Expert Answers for Today’s Tough BV Questions. January 14, 10:00 a.m.-11:00 a.m. PT/1:00 p.m.-2:00 p.m. ET. Featuring: Jay Fishman (Financial Research Associates), Michelle Gallagher (Adamy Valuation), Ken Pia (Marcum), and Jeffrey Tarbell (Houlihan Lokey).

    You can ask anything and everything during this very special panel session. And if you send in a video question by January 13, you get free admission! Send your video question to BVR’s training director, Jared Waters, at

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


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