Highlights from the NYSSCPA BV conference

BVWire attended the New York State Society of CPAs’ Business Valuation and Litigation Services Conference, and—as always—it was an excellent event. Here are a few highlights:

• Today, there are “unbelievable opportunities” for money laundering—valuers and other advisors need to consider themselves gatekeepers;

• A New York case is expected to trigger more LLC cash-out mergers, which means a big new opportunity for appraisers;

• Earnouts as a percentage of deal price are typically 10% or less but that figure can vary greatly (could even be up to 100%);

• Tax cases can go either to Tax Court or federal court—the Tax Court judges lean toward the IRS, but the federal court judges lean toward the taxpayer;

• The SEC has gotten very interested in SPAC-related enforcement, but not much has been written about valuations in this area;

• A large valuation practice uses the oLogit model to estimate a synthetic credit rating when valuing debt;

• A DCF analysis can be done to quantify a control premium—just compare the DCF using company-provided projections with one that reflects potential changes a hypothetical controlling owner could make; and

• Three-quarters of business owners will head for the exit over the next 10 years—business valuations will be needed to prepare for all these transitions.

There will be a detailed recap of the conference in the July 2022 issue of Business Valuation Update.

Extra: Is your state CPA society holding a BV conference this year? We’d love to know about it—send a note to info@bvresources.com.

IP damages experts dodge exclusion in trademark case

In a trademark infringement case in Florida, the plaintiff’s expert (an economist) was to testify as to corrective advertising damages, but the defendant made a motion that she be excluded. The court disagreed, allowing the expert to testify “provided Plaintiff proffers the necessary foundational testimony at trial to support [the expert’s] opinion regarding the amount of damages owed.” The defendant had an expert from an intellectual property asset consulting firm specializing in trademarks (who was also a CVA) who was to rebut the economist’s testimony and opine that corrective advertising was not required. The plaintiff argued that the expert was not qualified to testify because, “during his deposition [he] was unable to name the types of harm courts have found to justify corrective advertising.” But the court found him qualified to testify because the economist’s testimony opened the door for him to provide alternative damages calculations.

iiBV reaching out to young potential BVers

The International Institute of Business Valuers (iiBV) has launched a campaign to interest younger individuals and university students in a career in valuation. The organization has just done some short (less than 60 seconds) videos to reach fledgling BVers through channels such as Instagram, YouTube, and TikTok, which discuss a variety of topics including career opportunities, professional education, conferences, and news of the BV profession. You can see the iiBV video “LinkedIn” tree at linktr.ee/iibv.

In addition to these short videos, the iiBV has started using interview formats through Zoom, in longer, three-to-10-minute segments (along with a short teaser). The iiBV’s YouTube channel is at youtube.com/channel/UC6CmU7fWmRk0OzF__mmuKOA. “We’re excited about the video format and these marketing channels, believing they will increase the valuation profession’s exposure to younger individuals worldwide, and discuss topics of interest to them,” says Ray Moran (FON Valuation Services), the iiBV’s marketing director.

Comments due tomorrow on TAF exposure draft

Comments on the exposure draft, Understanding the Differences: Conclusion of Value v. Value Calculations, are due May 26. The draft was written by the Business Valuation Resource Panel of The Appraisal Foundation. A copy of the exposure draft is available if you click here.

To submit a comment, the TAF has a special form that is available if you click here.

PPA breakdown for air freight and logistics firms

Goodwill represents 56% of the purchase price in recent transactions in the air freight and logistics industry, reports Valuation Research Corp. (VRC). Its April 2022 industry update for this sector includes recent transactions, market multiples, company performance, and purchase price allocation percentages (see below). VRC does regular updates on a variety of industries, including biotechnology, building products, clinical research organizations, construction machinery and equipment, and more.

Strong M&A outlook in the food and beverage sector

“With an abundance of capital in private equity markets and large corporate players realigning their strategic vision, we believe 2022 is trending toward another strong year of M&A activity in the food and beverage space,” reports “Food and Beverage M&A Landscape” (Spring 2022) from Kroll. As for public-company trading multiples in this sector, the median EV/TTM EBITDA multiple is 14.8x (as of March 31, 2022) overall with subsectors ranging from 26.7x (for alcoholic beverages) to 6.5x (for protein producers).

Live from Hoboken! ASA’s New York Fair Value Conference June 16

An on-site attendance option is available for this year’s New York Fair Value Conference presented by the American Society of Appraisers. It will be held just across the river from Manhattan in Hoboken, N.J. A virtual option is also available, and you can find more information if you click here. The full agenda is available, and it looks to be another strong program for this annual event that BVWire never misses. Topics include international issues, a FASB update, intangible asset discount rates, hard-to-value securities, impact of inflation, and a SPAC update. We particularly like a recurring session, the Big Four Leadership Panel, with insights from high-ranking professionals from the four largest accounting firms in the United States. Hope to see you there!

NACVA announces its ‘super conferences’ schedule

Fort Lauderdale, Fla., in December? Sounds good to us! That’s the location for one of the three “super conferences” for 2022 from the National Association of Certified Valuators and Analysts. It moved its traditional in-person June conference to August (Salt Lake City), and, for December, it’s hosting two in-person conferences instead of a traditional single conference—one in Fort Lauderdale and the other in Park City, Utah. The August and December events will also be available virtually. What’s more, attendees will have an à la carte option—you will be able to register for individual sessions. The dates, locations, and details are on NACVA’s website—just click here.

Higher returns at Saudi Arabia banks

Because aggregate net income increased by 15.5% in 2021 (versus 2020), there was an increase in profitability ratios, reports Saudi Arabia (KSA) Banking Pulse for FY 2021 from Alvarez & Marsal (A&M). Return on equity (RoE) increased to 11.4% in 2021 (from 10.9% in 2020), and return on assets (RoA) increased to 1.7% (from 1.6%). “In 2022, we expect corporate and mortgage lending to grow primarily due to giga government initiatives such as Red Sea project, Qiddiya and NEOM,” says Asad Ahmed, managing director and head of Middle East financial services at A&M. “Moreover, higher crude oil prices following the Russia-Ukraine conflict should also support the overall government spending in Saudi Arabia. Furthermore, we expect that the rate increase announced by the Saudi Central Bank to match the US Federal Reserve’s rate hike policy will boost the banking sector’s net interest margins and in turn its profitability.”

May 30 deadline to attend the CBV Congress June 6-7

A strong program is being offered at the CBV Congress 2022, hosted by the CBV Institute, Canada’s valuation professional organization (VPO) and standard-setter. But you have until May 30 to register, which you can do if you click here. When you register, you’ll have the option to choose from one of three sessions happening simultaneously in the subject area of most interest to you: business valuation, litigation, or deals. Plus, you get online video access post-Congress to any sessions that CBV Institute received authorization to record.

BV movers . . .

People: Erica Rayter has joined Fiske & Co. as a forensic and valuation services senior; she will focus on assignments related to shareholder disputes, lost profits, breach of contract, marital dissolutions, personal injury product liability, and fraud investigations at Fiske, which is a boutique women-owned accounting, financial forensics, valuation, and litigation consulting firm located in South Florida … Tom Downes, ACA, BFP, has joined the UK accountancy firm Old Mill, where he will lead the financial modelling and valuations offering; he was formerly with PwC.

Firm: Baton Rouge, La.-based Postlethwaite & Netterville is adding RBM LLP of Shreveport, La., a firm that provides accounting, auditing, and tax services to individuals and businesses throughout the Southwest … Atlanta-based Aprio LLP is adding Walnut Creek, Calif.-based RINA Accountants and Advisors, which serves high-net-worth individuals and closely held businesses across targeted industries, including real estate, nonprofit, manufacturing, technology, and professional services from two offices in the San Francisco Bay area … Chicago-based Baker Tilly enters the Pacific Northwest by adding Seattle-based Bader Martin PS, which provides tax and accounting services to affluent individuals and their families, family offices, family-owned and closely held businesses. as well as professionals, executives, and not-for-profit organizations.

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

CPE events

• Best Practices in Developing Intangible Asset Valuations and Asset-Based Approach Business Valuations (A BVR Workshop), May 26, 10:00 a.m.-2:00 p.m. PT/1:00 p.m.-5:00 p.m. ET. Featuring: Weston Kirk (Willamette Management Associates) and Robert Reilly (Willamette Management Associates). CPE credits: 4.5.

How to apply the asset-based approach to value going-concern businesses is discussed in detail. The speakers also talk about best practices in applying the market approach and the cost approach to value intangible assets within an asset-based approach business valuation.

• The Dental Valuation Revolution, June 7, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Kameron H McQuay (Blue & Co. LLC) and Matthew J Howard (Blue & Co. LLC). CPE credits: 2.0.

The valuation landscape for dental practices is changing rapidly—with private equity funds and dental service organizations diving into the industry in force. The speakers will address this as well as industry-specific considerations for valuations concerning the officer compensation adjustment and typical (and some not-so-typical) income statement and balance sheet normalizations and adjustments.

Holiday Break

BVWire will not be published next week due to the Memorial Day holiday. We will return on June 8. Have a happy and safe holiday!