BVWire Issue #186-4 | March 28, 2018


Better bait boosts BV biz

“It’s all about having the right bait in the water,” says Danielle Berg, chief marketing and corporate communications officer of Aprio, an Atlanta-based CPA and advisory firm that has a BV practice. She says 82% of business-to-business buyers in a recent survey say a firm’s content had a significant impact on its buying decision. “What they’re buying is what it’s like to do business with Aprio—and is it better than Firm X or Firm Y—and I think, through content, you can give them a glimpse of that,” she says in an article. The firm produces an article every business day and asks partners for an outline that gets handed off to a former reporter leading a cadre of writers and a consultant who oversees SEO optimization. “Content marketing really does work,” Berg says. One tax partner generated $750,000 in new business in 2017 through a monthly newsletter.

Extra: You don’t have to hire a team of writers to produce a lot of strong content. Take a look at BVR’s Content License, which gives you unlimited use of content from BVR. Put it on your website, publish a newsletter, send it an e-mail and/or e-zine—use it any way you want!

back to top

Problematic process causes Chancery to use DCF as fair value indicator

The discounted cash flow analysis is not dead yet in the Delaware Court of Chancery. Although recent high court rulings in DFC Global and Dell have directed the Court of Chancery to give great or even exclusive weight to market evidence in a statutory appraisal proceeding, the Court of Chancery recently relied on the DCF to determine fair value in the merger between Verizon and AOL. Questions about the sales process made it impossible to assign the transaction price any value, the court emphasized.

Not ‘Dell compliant: AOL and Verizon began to discuss a deal in mid-2014. As rumors began to circulate about a possible transaction involving AOL, the company’s stock price rose and various third parties expressed interest in acquiring all or part of AOL. AOL’s board decided not to hold an auction, but the company engaged with potential bidders individually. After further negotiations with Verizon, the parties agreed to a deal at $50.00 per share in cash. The day the merger was announced, AOL’s CEO, Tim Armstrong, was asked in a TV interview why AOL did not conduct an auction. “You didn’t shop this to anyone else?” Armstrong replied: “No, I’m committed to doing the deal with Verizon.”

In adjudicating the dissenting shareholders’ appraisal petition, the Court of Chancery first asked “whether the sales process here is Dell Compliant.” To be “Dell compliant” meant potential bidders had sufficient information so that an informed sale could take place and there were no undue impediments due to the deal structure.

The Court of Chancery found that, while the market likely understood that AOL was in play, Armstrong’s professed commitment to doing a deal with Verizon in combination with certain deal protections could have turned off other potential bidders. Therefore, the court could not say that the deal price was the “best evidence of fair value.” Further, it was difficult to ascribe a non-Dell-compliant sales price any particular weight “on non-arbitrary grounds.”

In agreeing with the parties’ trial experts, the court found the DCF was the best way to value the company on the merger date.

This case presents yet another instance in which the court’s value determination came in below the deal price. The court arrived at $48.70 per share. The deal price was $50.00 per share.

A digest of In re AOL Inc., 2018 Del. Ch. LEXIS 63 (Feb. 23, 2018), and the court’s opinion will be available soon at BVLaw.

back to top

New tax law’s impact on intangibles

Under the new tax law, intangibles are more broadly defined than under prior law. Everything that is not tangible is considered intangible and taxable under the new law, including goodwill, according to Kash Mansori and Guy Sanschagrin, who are both with WTP Advisors. During a recent webinar on transfer pricing, they pointed out that this new definition has an important impact on the valuation of intangible property transferred across borders. With few exceptions, just about everything of value will be taxed.

IRS crackdown: The IRS and tax authorities of other countries are going after ill-prepared small and medium-sized firms over transfer pricing issues, they say. The IRS has two initiatives related to transfer pricing in its recent list of Large Business and International (LB&I) division campaigns: one on related party transactions and the other on in-bound distributors. Among the advice  Mansori and Sanschagrin gave during the webinar is that just because a company was audited in the past does not mean the IRS has OK’d its transfer pricing policies and results. Also, transfer pricing has (at least) two sides, so consult with local transfer pricing specialists.

back to top

Control premium advisory revisited

A member of the working group involved in the creation of Valuations in Financial Reporting Valuation Advisory 3: The Measurement and Application of Market Participant Acquisition Premiums, issued by The Appraisal Foundation, has written an article that reiterates the findings of the advisory. The article, “Market Participant Acquisition Premiums in Valuations for Financial Reporting Purposes,” is by Carla Glass, who is managing director in the Valuation and Litigation Support Services group at Marcum LLP.

back to top

Free webinar on Cost of Capital Navigator Q&As

The huge audience at our webinar on the Duff & Phelps Cost of Capital Navigator had so many good questions that we ran out of time, so there will be a free webinar on March 29 with Jim Harrington of D&P. Most of the webinar (which offers 1.5 CPE credits) will be devoted to questions from the audience. There will also be a brief demo of the new online application that will replace the print versions of the Valuation Handbook series. You can find more details on the Cost of Capital Navigator at

back to top

CPA firm merger activity

The 100 leading CPA firms reported 120 mergers during 2017, according to the “2018 Top 100 Firms” from AccountingToday. Readers of BVWire follow the mergers that involve firms with business valuation practices in the “BV movers . . .” section in every issue. If you have any merger news for us or any personnel changes, please send it to

back to top

Explaining BV to clients

An article gives some tips on how to have preliminary discussions with business owners about the valuation process and how it works. Although written as guidance for CPA personal financial planners, the article is helpful for anyone explaining BV to someone unfamiliar with it. The authors, Sidney Kess, an attorney with Kostelanetz & Fink, and Edward Mendlowitz, a CPA/PFS and accredited valuation expert with WithumSmith+Brown PC, tell CPAs that, if clients need a valuation, an accredited valuation expert should be engaged.

back to top

Global BV News

New study examines country risk models

Practitioners should carefully choose their country risk model because current models produce a wide range of cost of equity estimates, according to a paper. A case study of reference firms in emerging markets reveals considerable spreads in the models’ estimates of up to 25.6 percentage points for individual firms and 15.4 percentage points on average. Individuals from the Karlsruhe Institute of Technology (KIT), DZ Bank AG, Handelshochschule Leipzig (HHL), and Deutsche Bank AG wrote the paper, “Country Risk—Cost of Equity Measurement: Methodologies and Implications.”

back to top

IACVS Beijing conference May 28-30

Registration is now open for the 2018 International Business Valuation Conference (IBVC) in Beijing, People’s Republic of China, May 28-30. The International Valuation Standards Council (IVSC), China Appraisal Society (CAS), and Beijing Appraisal Society (BAS) support the event. Sessions include:

  • Valuation for the New Era of “Belt & Road”;
  • The Continual Globalization of Business Valuation;
  • Developing of a Legacy Profession; and
  • Innovation and Challenges in Global and Cross-Border Valuations.

back to top

BV movers . . .

People: Chris Wailand was recently named a shareholder at Piper Hawkins and Co. (Sarasota, Fla.); he joined the firm in 2015 … Tim Zimmerman of RSM Canada was named a recipient of The Canadian Institute of Chartered Business Valuators’ 2018 Top CBV Under 40 Award … Paul Rhea has joined St. Louis-based Anders CPAs + Advisors as director of advisory services; he will also work with Anders affiliate company, Claris Advisors … California-based White Nelson Diehl Evans LLP has admitted six new partners: Jill Cohen, Michael Glaab, Erin Johnson, Jennifer Pugh, Kassie Radermacher, and Christina WenkLaurie Foster has joined The Auxilio Group as executive director; Auxilio is a joint venture between Dixon Hughes Goodman and NCM Associates devoted to the automotive, heavy-truck, and related industries.

Firms: Congratulations to Schmidt Westergard & Co. (Mesa, Ariz.), which is celebrating its 50th anniversary this year; the firm has nearly 40 professionals, including five partners … Zdonek & Wolowicz Accountancy Corp. (Torrance, Calif.) has changed its name to Harik Minassi Coale, which reflects its partners’ names … Orlando, Fla.-based Batts Morrison Wales & Lee (BMWL) will open a new office in Dallas on April 1; the firm works exclusively with nonprofits and is a member of BDO Alliance USA Rehmann (Troy, Mich.) acquired Trivalent Group, a managed IT service provider based in Grandville, Mich., effective April 1; Trivalent has more than 700 clients … St. Louis-based Swink Smith Coplen & Co. has joined CPAmerica International, an accounting association of independent CPA firms … CliftonLarsonAllen has joined the Wall Street Blockchain Alliance (WSBA) and will be an active participant on WSBA’s working groups and advising CLA clients on blockchain developments and cryptocurrency transactions.

Please send your professional and firm news to us at

back to top

CPE events

back to top

New and Trending
LinkedIn Discussions

Q&A With Jim Harrington on the Duff and Phelps Cost of Capital Navigator

Thoughts on the Usefulness of Historical Private Company Transaction Multiples?

Bright-Line Rules for Tax Affecting S Corps?

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:

back to top

We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) or Sylvia Golden (Executive Legal Editor) at:
Share on LinkedIn

Not a BVWire subscriber?
Get on the list today.

In this issue:

Content marketing

DCF lives

Transfer pricing

Glass on MPAP

Navigator Q&As

CPA mergers

Explaining BV

Global news

BV movers . . .

CPE events

LinkedIn discussions

Copyright © 2018. All rights reserved.

Business Valuation Resources, LLC

111 SW Columbia Street, Suite 750
Portland, OR 97201
P: 1-503-479-8200