Morrison cautions appraisers regarding automation

Blind reliance on automated tools for business valuation is a danger, says past ASA international president Bob Morrison, FASA, who spoke on a recent webinar on the future of the valuation profession. While he agrees that the profession should embrace AI and other technologies, professional judgment must not take a back seat to computer models, he cautions. The other major issues he sees the profession facing are diversity, equity, and inclusion (DEI) and the “silver tsunami,” meaning the aging of the profession and the need to attract new young professionals. Morrison, who is also on the board of trustees of The Appraisal Foundation, made his comments during the International Webinar: The Future of the World’s Valuation Profession on June 3, organized by the FIABCI World Council of Experts.

Hitchner surveys COE data sources of choice

The Kroll (formerly Duff & Phelps) Navigator has been the consistent clear choice for cost of equity (COE) data by valuation analysts, according to ongoing surveys by Jim Hitchner (Valuation Products and Services). He’s been doing a number of surveys over the years, and the COE survey has been done periodically since 2019, which has shown consistent results for all of the data providers (see below).

The results of more surveys are in the June 2022 issue of Hardball With Hitchner.

No deduction for tax in shareholder buyout

In a North Dakota partnership dissolution case, the defendants argued on appeal that the district court erred in its valuation. They asserted that the district court was required to consider taxes in calculating the plaintiffs’ buyout. The district court found that the agreement in principle called for a valuation without a discount. The accounting firm for the defendants provided an analysis of what would happen if the assets of the partnership were liquidated. However, the district court found this to be speculative because the plaintiffs indicated there was no intention currently to liquidate. The state Supreme Court affirmed the district court’s decision.

The case is Sproule v. Johnson, 2022 ND 51; 2022 N.D. LEXIS 56; 971 N.W.2d 854; 2022 WL 803346, and a case analysis and full opinion are available on the BVLaw platform.

Valuation amid inflation: a free interactive webinar with Aswath Damodaran

BVR has a very special event next week—a free one-hour webinar on June 14 titled In Search of a Steady State: Inflation, Interest Rates, and Value—The (Inflation) Genie Escapes the Bottle! The presenter will be Aswath Damodaran (New York University Stern School of Business), known as the Dean of Valuation. This will be a special interactive webinar—bring your questions, and you can ask them live during the program. You can register if you click here (one CPE credit available). Mark your calendars: June 14. Time: 10:15 a.m.-11:15 a.m. PST; 1:15 p.m.-2:15 p.m. EST. See you there!

Cannabis lawsuit could be a game changer

A coalition of influential marijuana companies and stakeholders are planning to sue the federal government over alleged unconstitutional policies that affect their operations, according to a report in Marijuana Moment. Two lawsuits will be filed in federal district court. One will challenge the Controlled Substance Act (CSA) and will argue that prior court rulings on the federal government’s authority over intrastate commerce should not apply to marijuana companies. The second lawsuit will focus on the tax law’s Section 208E, which impedes cannabis businesses from deducting federal taxes. Our thanks to Ron Seigneur (Seigneur Gustafson LLP), who alerted us to this news. Seigneur is the co-author of The Cannabis Industry Accounting and Appraisal Guide, and he will co-present a BVR webinar on cannabis valuation in August.

Stout releases guide to ASC 842

Accounting Standard Codification (ASC) 842 is the new lease standard, and Stout has released a guide designed to give practical guidance and key takeaways from their experience with both public- and private-company adoptions. Public business entities have already adopted the new lease guidance. For private companies, the standard is effective for fiscal years beginning after Dec. 15, 2021. One consideration is impairment—leases will show up on the balance sheet and will be subject to impairment consistent with any other long-lived asset. The guide is available if you click here.

ASA announces election results

The American Society of Appraisers has announced the results of its 2022-23 elections for the new international officers, discipline governors, discipline committee officers, appraisal review management discipline, and members-at-large. Those elected will officially take office on July 1. “We commend these individuals and appreciate their service,” said the ASA in a statement. The full results are available if you click here.

Extra: Reminder—The 2022 ASA New York Fair Value Conference will be held next week, June 16, in person in Hoboken, N.J., and virtually.

EY releases global transfer pricing guide

The EY Worldwide Transfer Pricing Reference Guide 2020-2021 is designed to help identify transfer pricing rules, practices, and approaches. The guide covers 131 jurisdictions and gives an overview of transfer pricing tax laws, regulations, rulings, documentation requirements, transfer pricing returns and related-party disclosures, transfer pricing methods, benchmarking requirements, and much more. There’s also an interactive map where you can just click on a jurisdiction to view the guide chapter for that territory. To download the guide, click here.

BV movers . . .

People: Steve N. Economou has joined New York City-based Grassi & Co. as a principal in the firm’s Forensic, Litigation and Valuation Services group; he will primarily oversee business valuations and provide transaction advisory services … Brittany Dela Rosa, CPA, CA, CBV, has been named a partner at Calgary-based MNP; she is a member of MNP’s Valuations and Litigation Support Services team and prepares business valuations for a variety of purposes, including tax planning, corporate reorganizations, matrimonial and estate proceedings, and shareholder disputes … Rishi Aswani, CFA, has joined Houlihan Lokey in the firm’s Financial and Valuation Advisory (FVA) business in Mumbai as a managing director in the Portfolio Valuation and Fund Advisory Services practice; he joins from Duff & Phelps in Mumbai.

Firms: Los Angeles-based B. Riley Financial Inc. celebrates its 25th anniversary; starting as a research boutique, the firm added investment banking, appraisal, liquidation, restructuring, forensic accounting, venture capital, lending, merchant banking, and other financial services … Farmington Hills, Mich.-based UHY LLP is adding Stoy, Malone & Co. PC of Towson, Md., which provides a broad range of accounting services to individuals, businesses, business owners, and nonprofit organizations … Winchester, Va.-based YHB CPAs and Consultants is adding Owings Mills, Md.-based Glass Jacobson PA, with its six principals and 54 staff members; the firm provides tax, audit, and consulting services to clients throughout the greater Washington, D.C., metro area … Boston-based WilliamsMarston LLC has acquired tax consulting firm Moffett & Associates of El Segundo, Calif.; earlier this year WilliamsMarston acquired Bay Valuation Advisors, a firm with 24 professionals and offices in California, Massachusetts, New Jersey, and Colorado … Calgary-based MNP is adding Jean Luc Quenneville CPA of Laval, Québec, which has a team of five professionals … Toronto, Ontario-based firms Segal LLP and GCSE LLP are joining forces under the new name of Segal GCSE LLP; Segal provides audit, accounting, tax, and advisory services to a wide range of clients, while GCSE offers accounting, tax, and advisory experience and has long been the go-to Canadian firm for the legal industry … New York City-based Marcum LLP is adding LTSP Inc. of Newport Beach, Calif., which provides accounting and advisory services to closely held businesses and high-net-worth individuals; three partners and 19 associates from LTSP will join Marcum in its new Newport Beach office … Kroll has acquired Crisp, a real-time risk intelligence company that protects brands, assets, and people from reputational damage, security threats, and online harm.

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

CPE events

• Keys to Using a Royalty Database (FREE WEBINAR), June 9, 10:00 a.m.-10:50 a.m. PT/1:00 p.m.-1:50 p.m. ET. Featuring: Brett Schoell (ktMine). CPE credits: 1.0.

The ktMINE royalty transactions database is reviewed, including data sources, how the information is analyzed, and specific questions a practitioner may need to answer.

• Automating Valuation Reports, June 16, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Nick Mears (Caprock Business Consulting LLC). CPE credits: 2.0.

Learn the essential techniques to integrate Microsoft Excel and Word for valuation report writing purposes.