July 12, 2006 | www.BVResources.com | Issue 46-1

Last chance to register for record-breaking ASA conference
The conference hotel is already sold out—but never fear, the ASA has already booked a second block of rooms at a nearby hotel for attendees of its 2006 International Conference, meeting this year in Brooklyn, NY, from July 29 through August 2.  According to ASA marketing manager Betty Snyder, the attendance rate for this year’s confab is at an all-time high; and there are still seats available in most sessions and seminars.  To register, go to http://www.appraisers.org/conferences/2006_conference/registration/index.htm

Of particular interest to business valuators: the single, all-day intensives from the Center for Advanced Valuation Studies (CAVS), including the “Cost of Capital,” with Roger Grabowski, ASA (Duff & Phelps, LLC); “Valuations for Financial Accounting (FASB 141/142/144)” with Susan Heisey, ASA (D.L. Heisey & Co., Inc.); and “Making Valuation Pay,” with Warren Miller, ASA (Beckmill Research).

Speaking of Warren Miller, don’t miss his article on valuation and strategy: A New Framework for Gauging Unsystematic Risk, in the August issue of the Business Valuation Update (BVU).

A primer from Judge Laro: What ‘not to do’ when forming FLPs
Ever since the U.S. Tax Court began to develop its “economic substance” approach to transfer tax cases back in 1997, business appraisers have been able to glean key points on pass-through entity “reality” and basic valuation issues.  But the taxpayers in Estate of Lillie Rosen v. Internal Revenue Service, 2006 T.C. Memo LEXIS 116 (June 1, 2006), didn’t have any such luck, as they formed an FLP (family limited partnership) back in 1994.  By the time their case reached Judge Laro, a notable authority, he was able to produce a veritable “primer” on what not to do when trying to fit your FLP within the exceptions of IRC§2036—too late for the Rosen taxpayers, but just in time for BV appraisers, tax attorneys and advisors.

For your free copy of the case abstract, click here.

A simple, workable project budget that’s also . . . free
Every valuation engagement—no matter how straightforward—requires a budget, broken down by time, practitioner, cost and other “key” components.  Numerous project management programs are available commercially, but BV appraiser often find these cumbersome to adapt and use in valuation projects.  A BV-tailored template should also recognize the increasing amount of time that analyzing marketability discounts, costs of capital, etc. requires.  Participants at the recent NACVA annual conference in San Francisco received a simple, workable model from Bob Brackett (Crandall & Brackett, Wheaton, IL), who led a session on project budgeting.  The template is available free as a subscriber service from customerservice@bvresources.com.

An interview with FASB’s new ‘Seventh Man”
As of July 1, 2006, derivatives accounting and risk management expert Thomas Linsmeier joined the Financial Accounting and Standards Board (FASB), replacing outgoing member Katherine Schipper.  Linsmeier chairs the accounting department at Eli Broad College of Business (Michigan State); he’s also served as an academic fellow at the SEC.  Linsmeier recently discussed FASB’s conceptual framework with editors at CFO.com, including pension and lease accounting, the mismatch problem with derivatives accounting—and of course, the continuing debate on fair value accounting.  On how to end the debate, Linsmeier answered:      

  When you talk about historical cost and fair value, those two numbers are identical at an exchange transaction date. Then the issue becomes whether or not you want to re-measure the transaction price at a fair value in the future in the [accounting] model, or take the old transaction price and allocate it over time to the income statement. The real open question when you make that trade-off is, how might investors best be served? Further, which provides more relevant information to investors to help them predict the future economic prospects of a company: When you re-measure to fair value or when you allocate that original cost over time? It is a trade-off between relevance and reliability.

For more of the Q n A, go to: www.cfo.com/printable/article.cfm/7105169?f=options

I google, you google—and now a cool new site for industry analysts to google, too

Now that “google” is officially a verb, earning an entry last week in the latest (11th) edition of the Merriam-Webster Collegiate Dictionary, you may be interested to know that its uses extend far beyond the usual (researching an industry, say, or an internet date). In fact, a new site from the “lab” guys at Google.com allows you to track the search volume for any term since 2004, broken down by months. The site offers yet another tool to research possible economic trends or relevant patterns; we found it revealing to search keywords such as iPod, Enron, DaVinci Code, American Idol, and economic outlook. Try it yourself at http://www.google.com/trends

Kudos to recipients of IBA’s Shannon Pratt Award
At its annual Symposium last month, the IBA announced two winners of the Shannon Pratt Award: Robert T. Slee, CBA, MA, MBA, and Robert J. Cimasi, MHA, ASA, CBA, AVA , FCBI, CM&A, CMP.  The award recognizes individuals who have made major contributions to the business valuation profession. Slee is President of Robertson & Foley (Charlotte, NC) and author of Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests, (John Wiley & Sons, 2004), a book that is revolutionizing valuation methodology, according to IBA director Ray Miles. Cimasi is President of Health Capital Consultants in St. Louis, and a leader in valuation of companies in the health care industry. 

Delaware Radiology case on appeal

We just heard from Douglas Even Ress, Esq., (Kaufman Coren & Ress, P.C., Philadelphia), an attorney on Delaware Open MRI Radiology Associates, P.A. v. Kessler, et al. (April 26, 2006), one of the most important tax-affecting cases to issue from the Delaware Chancery Court.  Ress, who represents the minority shareholders, says that the parties have appealed the case.  Though not at liberty to discuss details now, Ress promises that he and his expert will be writing up a comprehensive “in the trenches” discussion for the BVU.  For free back issues of the BVWire which discuss the case, go to www.bvresources.com, and click on the link at the upper left margin.


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