Contribute to the BV profession in 2023

During 2022, we saw many examples of BV practitioners giving back to the profession—from volunteering on a board to speaking at a conference to writing an article. The valuation professional organizations—the ASA, AICPA, and NACVA—are always in need of practitioners to help with education, guidance, or standards matters. The Appraisal Foundation often has opportunities to volunteer on boards and committees, and, on the global front, so does the International Valuation Standards Council (IVSC). 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. So, if you haven’t yet contributed to the profession, think about doing so in 2023!

Lack of quantifiable damages dooms IP complaint

In a California case concerning intellectual property (IP), the defendant asked the court to dismiss the plaintiff’s complaint alleging violations of the state’s Unfair Competition Law (UCL) and asking for damages. To seek relief under the UCL, the plaintiff must show that there must be an “injury in fact and [that the plaintiff] has lost money or property as a result of the unfair competition,” the court wrote. “Although ‘the issue here is only the threshold matter of standing … [and] a specific measure of the amount of [the alleged] loss is not required,’ some detail as to the general value of the alleged injury is still necessary to allege damages under a UCL claim.” The plaintiff had not done this, and, therefore, the motion to dismiss was granted.

This case “should point out to attorneys and BV professionals alike that, even at the preliminary level, it is important that there be some clarity on at a minimum a range of damages or demonstration of a process that will determine that there are indeed damages,” writes BVLaw editor Jim Alerding (Alerding Consulting) in a case digest. “I have been involved in cases where the attorneys have come to me after the filing of a complaint and asked me to tell them whether there are quantifiable damages. In at least one case, there were not, and the complaint was withdrawn.”

The case is Zamfir v CasperLabs, LLC, 2022 U.S. Dist. LEXIS 194566; 2022 WL 14915618, and a case analysis and full court opinion are available on the BVLaw platform.

Recession tops Kroll’s 10 trends to watch in 2023

The new year “promises to be a tougher ride for most businesses, investors and consumers globally, but there is always opportunity in volatility,” according to the Kroll Institute in its latest report, “10 Trends to Watch Heading Into 2023.” These trends are:

1. Developed markets in recession. (Countercyclical businesses should see increased deal flow.)
2. Emerging markets: buoying global growth. (But there are risks to the outlook for China.)
3. Emerging markets face a sovereign debt crisis. (Could embroil some middle- and particularly low-income countries.)
4. Volatile financial markets and market dislocations. (Earnings pressure will likely persist into much of 2023, particularly for companies more vulnerable to interest rate rises or recession.)
5. Developing global trade tensions. (Between the U.S. and China, and maybe between the U.S. and Europe.)
6. Russia war on Ukraine persists. (Possible escalation scenarios cannot be ruled out for 2023.)
7. “Old” and “tropical” infectious disease outbreaks. (The virus lingers, and others may emerge.)
8. Growth of ESG regulation, transparency, and scrutiny. (This should improve measurement issues and reduce greenwashing.)
9. Heightened regulatory environment. (The SEC will focus on imposing new rules in such areas as cybersecurity, certain private fund practices, SPACs, and more.)
10. Increased cyber and social media risks. (But this will give a boost to the cybersecurity industry.)

Private-company EBITDA multiples rebounded in 3Q2022

After dropping to their lowest levels in recent years, EBITDA multiples rose to a median of 3.7x in the third quarter of 2022, up from 2.8x in the second quarter (see graph below), according to the latest issue of the DealStats Value Index (DVI). In the period analyzed, EBITDA multiples across all industries were highest in the third quarter of 2018, at 5.0x, but then decreased until they bottomed out in the first half of 2022.

The 30-page DealStats Value Index is a quarterly publication exclusively for DealStats subscribers. It provides trend information on valuation multiples and profit margins for transactions in DealStats, including multiples and margins by industry sector, interquartile range by sector and year, multiples and margins for private vs. public, and much more. If you are a subscriber to DealStats, you can download the current issue to see all the latest transaction trends if you click here.

Data on preowned medical equipment prices

The “BuckheadFMV January 2023 Benchmark Report on Pre-Owned Medical Equipment Prices” is now available. Based on data BFMV staff collected for the 36 months preceding publication, the report provides price benchmarks for over 800 different models of preowned medical equipment. Benchmarks are sorted by category, manufacturer/brand, and model, and are reported at the 25th, 50th, 75th, and 90th percentiles, along with an average price reported for each item. The report is currently scheduled to be published in January and July of each year. Click here for more information.

IVSC will propose changes to IVS

This April, the International Valuation Standards Council (IVSC) will publish an exposure draft outlining proposed updates to the International Valuation Standards (IVS) as well as the asset-specific standards (covering tangible assets, business and intangibles, and financial instruments). There will be a public comment period of 12 weeks, during which the IVSC will organize a series of webinars and roundtables to present details of the exposure draft. An updated version of IVS will be published in January 2024. More details will be forthcoming in early 2023. For more information on the project, click here.

Houlihan Lokey named best valuation firm by Asian hedge funds

For the third year in a row, Houlihan Lokey’s Portfolio Valuation and Fund Advisory Services practice has been recognized for its exceptional performance in valuation, earning the title of “Best Valuations Firm” at the HFM Asian Services Awards 2022. The award aims to reward Asian hedge fund service providers that demonstrated exceptional client service, innovative product development, and strong and sustainable business growth over the past 12 months. Read the full list of winners on With Intelligence’s site.

BV movers . . .

People: Asif Charania, CPA/ABV/CFF, ASA, has been named practice leader of the Valuation and Forensic Services practice at Richmond, Va.-based Keiter; he succeeds Harold Martin, CPA/ABV/CFF, ASA, CFE, who has retired as a partner and transitioned to a director at the firm … Derek Smith has joined Mercer Capital as a financial analyst, where he will provide business valuation and financial consulting services to public and private companies and financial institutions … Fiona Wallace, CFA, has been promoted to managing director at San Francisco-based Andersen; she is a member of the valuation practice in New York City and specializes in the valuations of intangible assets and businesses, including IRC Section 409A valuations, purchase price valuations, and the valuation of carried and capital interest … Tom West, co-founder of the International Business Brokers Association and author of such books as the Business Reference Guide, which many business valuers use for rules of thumb, passed away on Dec. 4, 2022.

Firms: Princeton, N.J.-based Withum is adding Martinez & Associates of Winter Springs, Fla., a management advisory, tax, and accounting services firm with a specialized focus in the automotive, construction and manufacturing, and government contracting industries … McCarthy & Co. PC, an accounting and advisory firm in Blue Bell, Pa. and Tinton Falls, N.J., has acquired New Jersey-based accounting firm Frank Leonard & Associates, LLC, of Fork River, which provides accounting and advisory services to transportation industry clients, with an emphasis on trucking and bus companies … Columbus, Ohio-based GBQ Partners LLC is adding VZN Group LLC of Toledo, Ohio, which provides tax, accounting, and consulting services to a variety of individuals and businesses throughout the Toledo area … J.S. Held (Jericho, N.Y.) has acquired Frostbyte Consulting, based in Calgary, Alberta, which provides environmental, health, and safety (EH&S); sustainability; and environmental, social, and governance (ESG) advisory and technology services globally … Atlanta-based Mauldin & Jenkins is adding MDG Professional Group PC of Huntsville, Ala., which provides auditing, accounting, tax, and consulting services to individuals and businesses throughout northern Alabama … New York City-based Marcum LLP is adding Nashua, N.H.-based Melanson PC, an accounting and advisory services firm with 13 partners and 100 associates that specializes in the government and nonprofit sectors … CliftonLarsonAllen LLP is adding Maumee, Ohio-based Gilmore Jasion Mahler, which provides assurance, business, and transaction advisory; outsourced accounting; risk advisory; and tax services across a range of industries … New York City-based Citrin Cooperman has acquired Los Angeles-based Kaufman Bernstein Lee & Robert, which will join the firm’s Business Management & Family Office practice; this was the 12th Citrin Cooperman acquisition of 2022.

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

CPE events

• BVLaw Case Update. January 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 LLC; James D. Ewart, James D. Ewart LLC; and Andrew Z. Soshnick, Faegre Drinker Biddle & Reath LLP. CPE credits: 2.0.

Two veteran valuators and a family law attorney/valuation expert examine recent valuation and financial litigation decisions.

• Valuing Winery Losses—Understanding the Process and Addressing Common Issues. January 25, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Tim Gillihan, JS Held. CPE credits: 2.0.

Loss events, particularly wildfires, can have unique effects on a winery and create complications with respect to insurance claims for business income losses, property damage, extra expense, crop damage, and inventory losses.