BVWire Issue #186-1 | March 7, 2018


BV research: The best just got better

For over 20 years, valuation experts have relied on Business Valuation Resources for their research needs—news, legal analysis, and publications. But now you can harness all of this in one platform called BVResearch Pro. This game-changing online platform combines all of BVR’s top research tools and partner content into one seamless interface, with innovative search capabilities to help you easily drill down to relevant content. Find the exact information you need for any engagement in seconds.

For one low price, here’s what you get:

  • Over 70 BVR books, guides, and special reports;
  • Over 570 transcripts of BVR webinars conducted by top valuation experts;
  • The monthly Business Valuation Update (with its extensive archive);
  • BVLaw (case digests and full court opinions);
  • ASA Business Valuation Review (archive of articles); and
  • White papers, partner articles, and more.

With this new platform, you'll always have the most current information on the latest valuation methodologies and approaches, court case decisions, industry news, and much more! For more information or to subscribe, go to, or email

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D&P Cost of Capital Navigator is now live

The much-anticipated Duff & Phelps Cost of Capital Navigator is now live. The Navigator is an interactive online application that replaces the Duff & Phelps Risk Premium Toolkit and the hardcover version of the Valuation Handbook – U.S. Guide to Cost of Capital.

Year-end data available: Data for year-end 2017 has just been made available—a full month sooner than with the old print version of the handbook. That’s just one of the benefits of this online tool. Quarterly updates will now be provided free of charge, and you’ll also be able to produce supporting documentation without dealing with the long-form tables.

The Navigator has all of the data originally included in the Valuation Handbook – U.S. Guide to Cost of Capital: the U.S. cost of capital data inputs (equity risk premia, size premia, industry risk premia, risk premia over the risk-free rate, risk-free rates) from two essential valuation data sets: the CRSP Deciles Size Study and the Risk Premium Report Study. Later in 2018, the Navigator will be updated to include additional data and information from the other three Valuation Handbooks as add-on modules.

You can watch a free demo and get more details at

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BVLaw Case Update

Case law matters! Here’s a sampling of noteworthy recent case discussions available to BVLaw subscribers:

Wright v. Phillips, 2017 Del. Ch. LEXIS 857 (Dec. 21, 2017)

In fair value determination analogous to statutory appraisal valuation, Chancery says companies’ S corp status “has discrete value applicable here,” as captured in expert’s use of 14.5% tax rate (as opposed to 31%); court approves marketability discount.

Radiologix, Inc. v. Radiology & Nuclear Medicine, LLC, 2018 U.S. Dist. LEXIS 1450 (Jan. 4, 2018)

Court admits expert calculation that determines one set of damages for two related plaintiff entities and that relies on data from nonparty parent entity; court finds calculation need not precisely track corporate structure to meet Daubert requirements.

Hornberger v. Dave Gutelius Excavating, Inc., 2017 Pa. Super. LEXIS 1044 (Dec. 15, 2017)

Valuation of shares of terminated stockholder based on shareholder agreement that requires calculation of adjusted net book value and specified adjustments may include discounts, where discounts are consistent with industry practice, appellate court says.

For a discussion of Hornberger and a host of other noteworthy recent cases, tune into BVLaw Case Update, March 27, featuring Jim Alerding (Alerding Consulting, LLC) and BVR’s legal editor, Sylvia Golden.

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Beware pie-in-the-sky valuations in Delaware

“Market evidence matters” is one lesson from a string of recent appraisal decisions in which Delaware courts have rejected claims brought by merger dissenters that the fair value of a company’s stock is higher than the price paid in the transaction. In an article, partners at Wachtell, Lipton, Rosen & Katz say, “[T]he courts will not readily accept pie-in-the-sky valuations prepared by hired litigation experts that do not correspond to the price investors and buyers with actual money were prepared to put at risk.” On the other hand, the authors point out that for “strategic transactions—which may include synergy value to which dissenting stockholders are not entitled under the appraisal statute—Delaware has made clear that the appraised value may well be less than the deal price.”

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NACVA asks IRS to recognize CVAs

In a letter to the IRS, the National Association of Certified Valuation Analysts (NACVA) asks the agency to include its Certified Valuation Analyst (CVA) credential as an approved qualified appraiser designation in Section 170 of the tax law. Section 170 requires any charitable contribution of property valued in excess of $5,000 to be substantiated on the tax return with a qualified appraisal. In proposed rules, the IRS did not explicitly state what designations would meet the definition. NACVA CEO Parnell Black, Rebekah Smith, executive advisory board chair, and Mark Hanson, standards board chair, signed the letter.

This past November, the CFA Institute, the American Society of Appraisers (ASA), and the National Association of Independent Fee Appraisers (NAIFA) asked the IRS to consider recognizing the designations they offer, such as the Accredited Senior Appraiser (ASA), Chartered Financial Analyst (CFA), the Independent Fee Appraiser (IFA), and others.

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Hidden gem from Damodaran on story-telling

Too few people have watched a YouTube video of Dr. Aswath Damodaran (Stern School of Business, New York University) talking about the dangers of using numbers without any narrative when constructing valuations. The video is from a continuing education presentation he gave to CFA Switzerland this past November in Zürich. This video should have a lot more views because it’s a crucial topic. Damodaran thought it so important he wrote a book on it, Narrative and Numbers: The Value of Stories in Business.

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Small biz sales to boom

Nearly three-quarters (73%) of business brokers and advisors surveyed predict the volume of small businesses sold (under $50 million) will increase in the next 12 months, according to the “Q4 2017 Market Pulse Report,” published by the International Business Brokers Association (IBBA), M&A Source, and the Pepperdine Private Capital Market Project. Two-thirds (65%) of advisors say that the Small Business Administration rules lowering minimum down payments from 25% to 10% will lead to more business sales this year.

“Small business owners seeking to sell their business in 2018 have cause to be bullish,” said Warren Burkholder, CBI, president of NEVRG Inc. “With the corporate tax rate dropping to 21% and the repatriation of overseas capital, companies will have more capital to allocate to acquisitions. Add to that heavy competition in the marketplace, which means even more companies will be pursuing smaller market transactions.” The Q4 2017 survey was completed by 264 business brokers and M&A advisors.

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HCC examines the valuation of healthcare brands

Health Capital Consultants (HCC) has started to run a series of articles titled “What’s Your Brand Worth? Valuation Considerations for Healthcare Enterprises.” The first part of the four-part series gives an overview of trademark and trade name valuation as it relates to the healthcare industry. The second part (just released) reviews the economic benefits accruing to the consumers of the trademark or trade name (i.e., patients).

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Global BV News

AI shouldn’t replace judgment

In an interview, Martin Brühl, chief investment officer and member of the management board at Union Investment Real Estate, a Hamburg-based investor, was asked how he would like to see the valuation profession evolve over the next few years. “I would like to see a continued focus on the human element of valuations,” says Brühl. “While technology and access to new data is certainly helping to enhance valuations, I am concerned about too much automation, report-writing generated through algorithms without necessarily reflecting the complexity and uniqueness of real property assets.” He goes on to say that skill and judgment should be aided, not replaced by, tools and technology such as artificial intelligence (AI) and algorithms. “After all, valuations are hypothetical prices being paid in a transaction between two entities, two human beings, and to anticipate what the price would have been if that transaction had occurred on the valuation date is something which I don’t see machines doing."

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BV movers . . .

People: Steven P. Napier, executive director, valuation & business modeling at EY, has relocated to the firm’s office in Hamilton, Bermuda; he was previously in the New York City office … Adriana De La Mora has joined Valuation Research Corp. as vice president and senior financial analyst in the firm’s Chicago office … NACVA has recognized two outstanding members for the fourth quarter of 2017: Jill Christopher, the James F. Dicke Professor of Accounting at Ohio Northern University (Ada, Ohio), and Joseph R. Petrucelli, a partner at Petrucelli, Piotrowski & Co. Inc. (Woodbridge, N.J.) … Andy Armanino will retire as CEO and managing partner of Armanino LLP at the close of 2018; COO Matt Armanino will succeed him effective Jan. 1, 2019 … Adam Freedenberg has been promoted to senior manager at Santos, Postal & Co. PC in Rockville, Md.

Firms: Enterprise, Ala.-based Carr Riggs & Ingram expands its footprint in Florida with the acquisition of Shinn & Co. of Bradenton … New York-based EisnerAmper opened an office in London headed by Robert Mirsky, who also heads the asset management group … Richmond, Ky.-based Baldwin CPAs acquired Buchenberger Eggers and Spurr of Louisville, Ky.; the firm will operate under the Baldwin CPAs name, and the merger will add two principals, Kathie Eggers and David BuchenbergerMarcum LLP executive recruiting and temporary staffing affiliate Marcum Search has acquired JHill’s Staffing Service, a Los Angeles recruiting agency specializing in staffing for the legal services profession … Houston-based Pannell Kerr Forster of Texas acquired D. Supkis Cheek LLP; owner Danielle Supkis Cheek will join as a director in the entrepreneurial advisory services department along with two senior associates … Hong Kong-based accounting firm D & Partners CPA Limited has joined PrimeGlobal, an international association of accounting firms.

Please send your professional and firm news to us at

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CPE events

  • Return Models and Mean Reversion (March 8), with Gary Schurman (Applied Business Economics). Part 1 of a BVR Special Series on Advanced Modeling and Methodologies.

    A discussion on the transition from discounted cash flow models (which use accounting metrics) to return models (which use economic metrics) and how the concept of mean reversion, which is an economic fact of life, should be accounted for in your valuations.

  • Valuing Manufacturing Companies: Value Drivers and Industry Risk (March 14), with Jay Gibson Jr. (Elliott Davis) and Brent McDade (Elliott Davis).

    Learn about methodology selection and why it is important to report your opinions using the vernacular of the manufacturing industry.

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New and Trending
LinkedIn Discussions

Valuation Implications of the New Tax Law: What Do You Think?

Bright-Line Rules for Tax-Affecting S Corps?

Integrating Excel Data Into Microsoft Word

Your discussion could be featured here—BVR's LinkedIn group is a place for valuation professionals to share, discuss, and learn about compelling BV topics. If you're not already a member, request to join:

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We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) or Sylvia Golden (Executive Legal Editor) at:
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In this issue:

BVResearch Pro

D&P goes live

New BV cases

Delaware wary

Sec. 170 appraisers

Tell a story

Biz sale boom

Healthcare brands

Global news

BV movers . . .

CPE events

LinkedIn discussions


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