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BVWire is your go-to source for the latest in the business valuation profession. Highlights for this week include:
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Florida court expands excludable personal goodwill in divorce
An important marital dissolution case out of Florida deals with a medical practice with 35 shareholders. In Florida, personal goodwill is excluded from the marital estate. But what about the personal goodwill of individuals other than the litigating party? Is their goodwill also excluded? Florida case law did not address this situation—until now.
Include them out: An appellate court ruled that the personal goodwill of all 35 shareholders should be excluded from the marital estate, not just that of the shareholder going through the divorce. The court noted that this is a case of first impression and the decision is of such importance statewide that it certified the question to the state’s supreme court. Essentially, the appellate court is asking the state’s highest court to give its stamp of approval on the decision. It is possible that the decision could be reversed, so stay tuned.
While this case involves a medical practice, the concept would apply to any business, that is, the nonsalable personal goodwill of all the entity’s professionals—not just the litigating party—should be excluded from fair market value for purposes of determining the value of the business for divorce purposes in Florida (assuming the decision stands).
The case is Rosenberg v. Rosenberg, 2024 Fla. App. WL 3076490 (June 21, 2024), and a case analysis and full court opinion will be on the BVLaw platform. |
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Stout acquires FRA; what makes a good fit?
In its eighth acquisition since receiving an investment from Audax Private Equity in November 2021, Stout has acquired Financial Research Associates (FRA), a nationally recognized financial consulting firm specializing in business valuation, forensic accounting, and litigation support. Founded over 40 years ago by Jay E. Fishman, the firm’s 30 professionals will join Stout’s Valuation Advisory group.
Alluring features: What makes a valuation firm a prime acquisition target? Two factors are geography and deep expertise, either in a practice area or industry, that complement the acquirer. “FRA’s deep expertise and strong market presence in the tri-state area including Pennsylvania, New Jersey, and New York complement Stout’s existing strengths, enhancing our ability to deliver exceptional service and solutions to our clients,” Greg O’Hara, president of Stout’s Valuation Advisory group, said in a press release.
These same two factors came into play with Stout’s acquisition a few years ago of Vantage Point Advisors, a boutique valuation and advisory firm. At the time, Stout’s heaviest concentration of offices was in the Midwest and on the East Coast. Vantage Point had a West Coast and Pacific Northwest presence, which helped Stout to expand into those areas. Also, Vantage Point had deep industry experience and technical knowledge particularly in the life science and technology sectors and Stout’s capabilities in these industries were not as extensive. Plus, Vantage Point’s Southern California location near biotech and life sciences firms made it especially attractive to Stout. Vantage Point also had expertise with early-stage companies, an area where Stout wanted a deeper bench—and other types of services could be offered as these firms grow and mature.
Other factors go into the decision to buy or sell a valuation firm or practice as well. The BVResearch Pro platform (subscription required) has an article with more details on the Vantage Point acquisition. There is also an article by Nancy Fannon on the acquisition of Meyers, Harrison & Pia LLC by Marcum in 2017. |
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Reminder: Comments wanted on revisions to cheap stock guide
The AICPA’s Financial Reporting Executive Committee has released a working draft of two updated chapters from the AICPA Valuation of Privately-Held Company Equity Securities Issued as Compensation guide. The chapters address secondary market transactions, and the revisions are designed to better align with FASB ASC 820, Fair Value Measurement, and FASB ASC 718, Compensation—Stock Compensation. The new guidance will likely have significant implications for financial reporting valuations of private-company common stock underlying stock-based compensation awards. Comments are due by September 20. |
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Tomorrow! AI in BV virtual event
BVR will be presenting a virtual conference tomorrow, July 18, designed to equip business valuation professionals with cutting-edge knowledge on the integration of artificial intelligence (AI) in their field. There will be five sessions during the five-and-a-half-hour event:
- AI Is Here, Where Are You? (Greg Endicott, ValueVision);
- Enhancing Business Valuation With AI (Scott DeMarco, Equitable Value LLC);
- Using the Income Approach to Value Companies That Use AI (Jim Alerding, Alerding Consulting LLC);
- Creating Profit From AI: Podcasts, Prompts, and Products (Melissa Gragg, Bridge Valuation); and
- Panel Discussion and Q&A, with all of the event’s speakers.
The event is included with BVR’s Passport Pro subscription. For others, you can get more details and register if you click here. BVWire will be there—will you? |
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AICPA offers five-day school for BV newbies
If you or someone on your staff wants to move into the practice of business valuation, consider the AICPA and CIMA 2024 National Business Valuation School, which will be held live in Denver from August 12 to 16. This course is designed for new staff, and it serves as preparation for the ABV exam. The course is not just for CPAs—it is open to all financial professionals. Two BVR editorial board members will be teaching the school: Kevin Yeanoplos (Brueggeman and Johnson Yeanoplos PC) and Harold Martin (Keiter, Financial Consulting Group), who are the longest-tenured instructors for this course, having taught it since 2007. The course textbook is Financial Valuation: Applications and Models, edited by Jim Hitchner (Yeanoplos and Martin are co-authors). For details and how to register, click here. |
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Reminder: Survey on fastest-growing, most-profitable practice areas
Now that we’re halfway through the year, we’d like to know: What is your fastest-growing valuation practice area? Valuations for marital dissolutions? Income/estate/gift tax? Valuations for M&A purposes? Please take this month’s “Two-Minute Practice Builder” survey that also asks about the most profitable practice area, which may or may not be the same as the fastest growing. Click here to take the survey, which is part of BVR’s ongoing BV Firm Benchmarking Study in collaboration with Rod Burkert (Burkert Valuation Advisors). All responses are confidential, and the results will be published in the last BVWire issue of the month. Thank you for participating! |
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RICS updating guidance on valuing bars and nightclubs
“Licensed leisure properties” in England and Wales include public houses, bars, nightclubs, and restaurants licensed for the sale of alcohol. The Royal Institution of Chartered Surveyors (RICS) is working on an update of the 2010 RICS guidance “Capital and Rental Valuation of Public Houses, Bars, Restaurants and Nightclubs in England and Wales.” Parts of the licensed leisure market are highly regulated, and RICS wants to incorporate the views of market stakeholders on how the valuation process interacts with the regulatory environment, “to make sure our coverage of the valuation process is clear, concise and balanced,” the organization said. RICS was scheduled to take comments through July 19.
Extra: BVR has a 198-pagespecial report, What It’s Worth: Valuing Nightclubs, Bars, and Adult Cabarets in the U.S.
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IVSC launches survey on legal aspects of valuation
If you are a valuation professional who offers litigation support services or a legal professional involved in valuation matters, please take a survey designed to gather feedback on the legal aspects of valuation practices worldwide. To take the survey, click here. The survey, from the International Valuation Standards Council (IVSC), will capture insights on potential engagement topics and partnerships, which will inform IVSC’s efforts to collaborate with the legal and judicial communities. Your input will support the development and advancement of International Valuation Standards (IVS) and valuation professionalism in this domain, promoting consistency and professionalism for the public good. |
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BV movers . . .
People: Jeff Cooper has been promoted to senior valuation associate at Philadelphia-based Centri Business Consulting; he originally joined the firm as an intern in the valuation practice before becoming full-time; he has assisted clients across various industries with enterprise valuations, ASC 842s, contingent considerations, and complex financial instrument valuations.
Firms: Stout has acquired Financial Research Associates, a financial consulting firm specializing in business valuation, forensic accounting, and litigation support with over 30 professionals and offices in Pennsylvania, New Jersey, and New York (see the separate news item in this issue) … New York City-based Citrin Cooperman Advisors has acquired substantially all the assets of S&G LLP, a Worcester, Mass.-based assurance, tax, and advisory firm with five partners and over 30 professionals, expanding the firm’s presence in the New England region … Lexington, Ky.-based Dean Dorton has acquired DeRosa Mangold Consulting, a SaaS solutions provider based in Waco, Texas … Atlanta-based Aprio has received a strategic investment from Charlesbank Capital Partners, a middle-market private investment firm, which represents the first investment of institutional capital into Aprio; the firm has a business valuation practice led by Carrie Zhou, ASA.
Please send your professional and firm news to us at editor@bvresources.com. |
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CPE events
Unlocking the Power of Granular Data: Enhancing Business Valuations With Bizminer (FREE WEBINAR), July 23, 10:00 a.m.-10:50 a.m. PT/1:00 p.m.-1:50 p.m. ET. Featuring: Galen Pugh (Bizminer). CPE credits: 1.0.
Bizminer has a database of financial statements, valuation tools, and market environment analytics for over 9,000 lines of business. This free webinar will examine the platform’s data analytics and present some practical applications for leveraging its industry information in a valuation engagement.
Industry Analysis: Transportation and Logistics Valuation, July 25, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Samantha Albert (Mercer Capital). CPE credits: 2.0.
Real-life examples and case studies are included in this look at the transportation and logistics industry. Companies operating within this space can vary widely in terms of key asset bases, operating structure, and risk profiles. |
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We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) at: info@bvresources.com.
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