New Year’s resolution: Give back to the BV profession

The future of the valuation profession depends on the contributions that practitioners make to the advancement of the profession. Practitioners contribute to the profession in a number of ways, such as:

• Volunteering on a board, committee, or working group;
• Teaching a course;
• Writing an article or book;
• Speaking at a conference; or
• Conducting a webinar.

The ASA, AICPA, and NACVA are always in need of practitioners to serve on committees and working groups related to education, guidance, or standards matters. The Appraisal Foundation often has opportunities to volunteer on boards and committees, and so does, on the global front, the International Valuation Standards Council (IVSC). BVR is always looking for authors and speakers for its publications, books, webinars, and conferences (send an email to andyd@bvresources.com). In addition to helping the profession, the more you volunteer, write, teach, or speak, the more you learn about your profession. What’s more, you can be on the cutting edge of new guidance that your committee or work group is developing.

If you haven’t yet contributed to the profession, consider doing so in 2022!

Silver lining to Vinoskey ESOP appeal decision

In the well-publicized Vinoskey ESOP case (our latest coverage is here), the appellate court affirmed the district court in deciding that the company owner had extensive knowledge about the company and its prior valuations, and, thus, it was plausible to infer that “something was off.” There was no clear error in the district court finding that the owner violated ERISA.

Forgiven debt offset: However, the appellate court allowed an offset to damages for the debt the owner forgave. The American Society of Appraisers had filed an amicus brief in the appeal, and one issue it raised was that such debt forgiveness should be considered when assessing damages as per principles generally applied in valuation-related damages calculations.

The case is Walsh v. Vinoskey, 2021 U.S. App. LEXIS 35952, and a case analysis and full opinion are available on the BVLaw platform.

Video available of Shannon Pratt memorial service

A memorial service for Shannon Pratt was held January 6 at Valley Community Presbyterian Church in Portland, Ore. The service was livestreamed, and a video has been posted on the church’s Facebook page (click here). A business valuation pioneer and legend, Dr. Pratt passed away at his home in Portland on Nov. 26, 2021, at age 88. Memorials may be made to Valley Community Presbyterian Church, 8060 SW Brentwood St., Portland, OR 97225 or to The Rotary Club of Portland (click here).

Survey shows the graying of the appraisal profession

Two-thirds of appraisers in the U.S. are age 55 and older, according to a survey The Appraisal Foundation (TAF) and the Appraisal Institute (AI) conducted. About 20% are aged 45 to 55 and just 10% are aged 35 to 44. Survey respondents were appraisers from different disciplines, not just business appraisers. In terms of gender, “women and non-white ethnicities are underrepresented among the appraisal profession,” the survey results say. Only 32% of appraisers reported identifying with the female gender. A mere 4.4% of survey responses were from Black or African-American respondents (although these groups make up 13.4% of the U.S. Census). Hispanic, Latino, or Spanish origin were even less represented in the survey, at 3.7%, even though they make up 18.5% of the U.S. Census. TAF and AI plan to use these survey results when developing future strategies and initiatives. More information on TAF’s diversity, equity, and inclusion initiatives can be found if you click here.

Extra: An article by Jim Alerding (Alerding Consulting) in the January 2022 Business Valuation Update spotlights the staffing problems BV firms are facing.

Imaging centers: If you’ve seen one, you haven’t seen them all

If you value the local hardware store, the next one you value is likely to look pretty much the same. But, if it’s a diagnostic imaging center, the differences between one facility and another, or one market and another, can be quite substantial. This is due to a number of variables in imaging center content and local-area competitive influences on the business, according to Douglas Smith (Phase 4 Radiology Business Strategies LLC), the author of a chapter on imaging centers in the BVR Guide to Ancillary Healthcare Services Valuation. He will conduct a webinar today, January 12, on valuing imaging centers.

There have been many changes to the healthcare landscape that impact valuation, such as referral patterns. For example, upon review of historical referring physician metrics, the valuation expert learns that material numbers of referrals to the subject entity have come from private-practice physicians who have recently become employees of a hospital with its own imaging centers. The expert would have to assess to what degree, if any, historical referrals to the subject entity will continue in the future.

Updated ‘Stout Restricted Stock Study Companion Guide’ available

The most widely used restricted stock transaction database for providing empirical support for a discount for lack of marketability (DLOM) is the Stout Restricted Stock Study (formerly FMV Opinions). The 2021 version of the “Stout Restricted Stock Study Companion Guide” is now available. It reflects updated tables and graphs that contain new transactions, and it also addresses higher levels of volatility due to COVID-19 and how utilizing the VIX adjustment may now be appropriate depending on the valuation date. The study is updated quarterly and contains over 750 screened transactions with up to 60 data fields. The database includes the Stout Calculator, which makes it easy to use Stout’s methodology and determine a DLOM driven by the financial characteristics of your subject company, as well as the volatility of the market. This is the preferred analysis as opposed to a simple listing of all the studies and their average discounts and then estimating a DLOM from these benchmark averages. To download the new “Stout Restricted Stock Study Companion Guide,” click here.

Free replay of Kroll’s Alternative Investments Conference 2021

Hot-button global valuation and regulatory issues facing alternative asset managers and investors were among the topics discussed at Kroll’s 15th Annual Global Alternative Investments Virtual Conference. You can access recordings of all the sessions if you click here. Industry experts shared their perspectives on the alternative fund sector, with a focus on valuation, risk, governance, and fund operations. Alternative investments can include hedge funds, private equity and venture capital, real estate and offshore fund vehicles, commodities, and the like.

CBV Institute releases its 2021 journal

The Chartered Business Valuators Institute (CBV Institute), Canada’s valuation professional organization (VPO) and standard-setter, puts out an excellent journal each year, and the 2021 edition is now available. The Journal of Business Valuation, 2021 edition, includes articles on how to maintain independence as an expert, causation and financial losses, COVID-19 impact on valuations, forecast validation for economic losses, and the challenges of litigation engagements for smaller businesses. Some very interesting reading here! The journal is on the BVResearch Pro platform, a clearinghouse of 20,000 BV-related articles, books, court cases, webinar transcripts, and much more.

IVSC gets two new members

The newest members of the International Valuation Standards Council (IVSC) are:

• The Union of Accountants, Auditors and Financial Workers of the Federation of Bosnia and Herzegovina (UAAFWFBH), which is a nongovernmental, nonprofit professional association, membership in which is mandatory for all certified professional accountants in that area; and

• Sparta & Co., with offices in Istanbul and London, which is a strategy and corporate finance company that provides international M&A advisory services.

The IVSC’s member and sponsor network includes more than 170 organizations, including the leading valuation professional organizations (VPOs), valuation service providers, government and regulatory bodies, academic institutions, and the users of valuation professional services.

BV movers . . .

People: Jesse Gillett, CPA/ABV, CFE, has been admitted to the partnership at Boston-based Edelstein & Co. LLP; he joined the firm in 2015 and is part of the business valuation and forensic accounting team … Adam Klein has joined Houston-based Weaver as a managing director in the firm’s rapidly growing healthcare advisory services practice; his expertise is in the valuation of physician compensation, provider strategies, transactions, system design, and financial and operational performance improvement … The National Association of Certified Valuators and Analysts (NACVA) has named its outstanding members for the fourth quarter of 2021: Allyn Needham, Ph.D., CEA, a partner and testifying expert at Shipp Needham Economic Analysis LLC since 1997, who has testified in cases involving personal injury, wrongful death, employment matters, commercial damages, business valuation, and matters relating to Chapter 11 bankruptcies; and Shannon H. Shipp, Ph.D., CEA, MAFF, a partner at Shipp, Needham & Durham LLC since 1997 and a testifying expert since 1994, whose expertise is in calculating lost profits, lost economic support, lost value of future medical expenses, lost profits, and lost business value … Philippe Penelle has joined Kroll as a managing director in the firm’s transfer pricing practice based in Los Angeles; he has over 20 years of experience designing, valuing, and defending transfer pricing structures on behalf of multinational clients and their counsel.

Firms: New York City-based EisnerAmper LLP is acquiring business process outsourcing firm Keating Consulting Group of San Mateo, Calif., which has a staff of 55 professionals … Isdaner & Co. (Bala Cynwyd, Pa.) has acquired the accounting firm of RW Group LLC of Kennett Square, Pa. … McCarthy & Co. (Lafayette Hill, Pa.) has acquired Borislow Factor & Kaufmann (Blue Bell, Pa.); the combined firm will have almost 50 employees and will move into a new building in Blue Bell … Marlton, N.J.-based Baratz & Associates P.A. has merged with Metter & Co. of Conshohocken, Pa. … HMA CPA PS (Spokane, Wash.) has acquired Kavadias Group PLLC, also of Spokane, and the combined firm will have a staff of 29 professionals … Southfield, Mich.-based Hodges Accounting & Advisory Services has acquired the practice of the late Kenneth J. Baranski, CPA PLLC, of Bad Axe, Mich., and has also added Laurie Messing CPA PLLC with offices in Ubly and Bad Axe.

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

CPE events

• Practical Considerations for Valuing Imaging Centers, January 12, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Douglas G. Smith (Phase 4 Radiology Business Strategies LLC). CPE credits: 2.0.

Even the most seasoned expert can have a tough time coming up with—and defending—a value for diagnostic imaging centers because of the complex nature of the business.

• Valuing Small Owner-Operated Business, January 26, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: David Coffman (Business Valuations & Strategies PC). CPE credits: 2.0.

Valuations of small (under $5 million) owner-operated businesses need to consider the unique characteristics of these firms. You’ll learn about these, plus reasonable owner compensation and how to deal with marketability and lack of control discounts.