BVR Logo November 17, 2021 | Issue #230-3

BVWire is your go-to source for the latest in the business valuation profession. Highlights for this week include:

Working group comments on new global BV glossary

A video has been posted that includes members of the working group that developed the International Valuation Glossary—Business Valuation, a revised version of a prior glossary published in 2001. This was a collaborative effort that began in May 2019 and involved several valuation professional organizations (VPOs) as well as other stakeholders. You can access a copy of the new glossary if you click here.

Key point: “We do not intend the glossary to be authoritative—rather a helpful tool and a precursor to a harmonization of terms,” says Lucas Parris (ASA, USA) in the video. Steve Choi (RICS, USA) adds: “If any term in this glossary conflicts with a published governmental, judicial, or accounting authority, precedence should be given to the use and interpretation of terms as they appear in applicable published authoritative guidance, given the purpose of the valuation.”

The prior glossary needed an update because new terms have gained traction and become more popular in the market and in practice, particularly with the introduction of fair value in IFRS and US GAAP and the increasing importance of intangible asset valuation.

Living document: It will certainly not be another 20 years before this new glossary gets updated. “The working group expects to revisit the glossary periodically and update it as needed, bringing in input from additional organizations beyond those listed in the glossary to promote ever wider use of the document,” says Alexander Aronsohn (IVSC, UK).

The other members of the working group are: Catalina Miranda (chair; CBV Institute, Canada); Jeffrey Tarbell (ASA, USA); Muath Alkhalaf (TAQEEM, Saudi Arabia); and Omar Mohammad Zaman (TAQEEM, Saudi Arabia).

Dietrich updates landmark research on physician compensation

The December issue of Business Valuation Update includes an article by Mark Dietrich that updates his important research on the geographic distribution of physicians in the United States. It includes an updated comparison of the actual physician marketplace to MGMA’s Provider Compensation data report 2020 based on 2019 data. Dietrich has long maintained that the use of compensation surveys to determine the fair market value of physician compensation is seriously flawed. The article also incorporates key commentary from CMS about the use of surveys for Stark fair market value. Finally, there is a discussion of the pitfalls of survey usage for transaction valuation and marital property litigation involving physician practices.

Key ESOP case underlines importance of the management interview

In the published opinion in the groundbreaking recent Walsh v Bowers ESOP case, the court noted that the DOL’s valuation expert’s “failure to follow Uniform Standards of Professional Appraisal Practice (USPAP) introduced substantial errors into [his] analysis.” For example, the expert did not do a management interview, which violates USPAP’s scope of work and competency rules.

Ken Pia (Marcum LLP) and Ian Rusk (Rusk O’Brien Gido + Partners LLC), who testified for the defense, recognized that it is sometimes difficult to do an interview in the context of litigation, but there are other ways of collecting the needed information. For example, management can answer questions in a deposition. Also, the court can order the other side to submit to a management interview.

The December isssue of Business Valuation Update has an article that gives more insights from Pia and Rusk on the ESOP valuation issues in the case.

Letter sent to Congress regarding valuation discounts

The American Society of Appraisers and over 100 other business groups and organizations sent a letter to Rep. Neal (D-Mass.) and Rep. Wyden (D-Ore.) urging exclusion of any tax proposals that would impact family businesses and farms, such as eliminating discounts for lack of control or marketability. Proposals such as taxing unrealized gains, halving the estate tax exemption, limits to grantor trusts, and changes to valuation discounts are not in the current framework of the Build Back Better Act—for now, the ASA points out.

Extra: Will Frazier (Weaver) has an article on the resiliency of valuation discounts for family limited partnerships despite ongoing efforts to eliminate them.

Article examines brand values, ratios, and multiples

There has been a dramatic shift in the importance of brands in M&A transactions, with the value of customer relations overtaking the brand-value-to-enterprise-value ratio, reveals a new article. Between 2003 and 2020, the share of brand value dropped by half while customer value almost doubled. The article, by Christof Binder, managing partner of Trademark Comparables AG, covers the importance of brands in corporate M&A and provides a comprehensive list of the 50 most expensive brands and brand portfolios ever acquired, including their values, ratios, and multiples. The article also discusses general trends in importance and appreciation of brands versus customer relations in M&A and country-by-country differences.

Another interesting point: The perception that brands have a very long life has changed. The average useful life assumed in the valuation of brands has decreased over time, from more than 40 years to less than 20 years today, says Binder.

To access the article, which appeared in the World Trademark Review (WTR) magazine, click here.

More jabs at the proposed billionaire tax

Although it could give a lot of work to appraisers, the proposed billionaire tax is an example of “really bad tax law,” says the dean of valuation, Aswath Damodaran (New York University Stern School of Business). An article in The Wall Street Journal also rips into the proposal, making some of the same points Damodaran did, but also notes that it would accelerate the shrinkage of the U.S. public capital markets. The proposal’s tax on unrealized gains would discourage entrepreneurs from taking their companies public, the article says. For now, the proposal has been eliminated from the latest version of the spending bill, but the current version has a provision that would impose a 5% surtax on those earning more than $10 million a year, with an additional 3% on income of more than $25 million.

Reminder: Preorder Trugman’s sixth edition

Understanding Business Valuation by Gary Trugman (Trugman Valuation) has been the go-to book for real-world examples on how to apply valuation theory and complex topics. Praised for its easy-to-understand style, the book draws on the author’s long and practical experience. A revised, sixth edition is available for preorder for an early 2022 release, which will also include an access link to bonus materials—everything from court cases to checklists to sample valuation reports. To preorder, click here.

Note: If you are a subscriber to BVResearch Pro or BVR’s Digital Library, the book will be included with your subscription, so there is no need for you to preorder.

ASA fair value virtual conference December 1

The American Society of Appraisers will hold its 2021 ASA Fair Value Virtual Conference on December 1 from 1:00 p.m. to 5:10 p.m. ET. Conference chair Ray Rath (Globalview Advisors) has put together an impressive program of topics and speakers: stock-based compensation (Amanda Miller, EY); SPACs (Harris Antoniades, Stout); discount rates for ASC 842 debt valuations (Vincent Covrig, Crowe LLP); an IVSC Update (Mark Zyla, Zyla Valuation Advisors LLC); and an update from the company-specific risk premium task force (Roger Grabowski, Duff & Phelps). There will also be a FASB update. This is a virtual event with up to four hours of CPE credit.

Most finance execs think global BV standards are in conflict

Almost three-quarters (72%) of finance executives around the world believe there are material inconsistencies and/or contradictions between the various business valuation standards currently in use globally. This is according to a new study on the importance of business valuation standards to finance executives. The final sample consists of 196 participants from 32 different countries across all continents. One of the conclusions in the study is that ideally one independent standard-setter should issue standards that are applicable and accepted across the world. The study is explained in an article published in Bewertungs Praktiker, which you can access here.

We point out that the article does not mention the detailed comparison that has been made of the global valuation standards that concludes that they do not conflict with each other. There are two interrelated charts, one on the different sets of U.S. business valuation standards and the other on the various international standards.

The study was led by three academics, all of whom are members of the International Valuation Standards Council’s Europe Board: Dr. Marc Broekema, assistant professor at the Department of Business Studies, Leiden Law School of the Leiden University; Dr. Olesya Perepechko, lecturer at the Great St. Petersburg Polytechnic University; and Professor Klaus Rabel, a professor of business valuation at the University of Graz.

Preview of the December 2021 issue of Business Valuation Update

Here’s what you’ll see:

  • Valuers Converge (in Person!) at the ASA International Conference” (BVR Editor). This is a recap of some sessions covering small promissory notes, shareholder disputes, sports businesses, valuing defensive patents, IRS news, competing appraisals, and more. Over 600 valuation experts from all disciplines came together for the American Society of Appraisers’ International Conference in Las Vegas, October 24-26. This was a hybrid event, and many of the attendees were on-site.
  • An Inside Look at the Landmark ESOP Valuation Case” (BVR Editor). For over a decade, the Department of Labor has not lost a major ESOP case on a valuation issue, but its winning streak ended with Walsh v. Bowers. The case involves many key valuation issues, and Ken Pia (Marcum LLP) and Ian Rusk (Rusk O’Brien Gido + Partners LLC), expert witnesses for the defense, give their insights.
  • Items of Interest Gleaned From the ASA Conference Networking Ops” (BVR Editor). BV firm staffing troubles, Shannon Pratt’s video remarks about his new book, a new app for fractional interests, a heightened interest in businesses with a real estate component, and help needed in developing a new module for the Cost of Capital Navigator are just some of the things we learned outside the regular sessions at the ASA conference—in and around the exhibit hall and during the many networking breaks.
  • Letter to the Editor: A New Development in Personal Goodwill” (R. James Alerding, CPA/ABV). This article presents remarks and comments from BVR’s legal editor on a previous article that discussed Florida’s proposed legislation to clarify the value of goodwill in the marital interest of closely held businesses.

The issue also includes:

  • A full section of “BV News and Trends/Global BV News and Trends”;
  • Regular features: “Ask the Experts” and “Tip of the Month”;
  • BV data spotlight: “DealStats MVIC/EBITDA Trends,” “ktMINE Royalty Rate Data,” “Economic Outlook for the Month,” and the “Cost of Capital Center”; and
  • BVLaw Case Update: The latest court cases that involve business valuation issues.

To stay current on business valuation, check out the December 2021 issue of Business Valuation Update.

BV movers . . .

People: Gail Markham, CPA, ABV, CFF, CFE, CFP, a Florida Supreme Court Certified Family Mediator and partner at Markham Norton Mosteller Wright & Co. PA, has been awarded the Association of Family Law Professionals’ Hugh E. Starnes Think Outside the Box Award, which recognizes outstanding leadership and dedication to nonadversarial best practices in family law … David Beckman, CPA, CFF, CFE, has been promoted to a partner at New York City-based Anchin Block & Anchin LLP; he is in the firm’s litigation, forensic, and valuation services group, advising and consulting on the application of accounting and auditing standards, investigating accountants’ malpractice, identifying and analyzing fraudulent financial reporting, analyzing contract and shareholder disputes, performing forensic investigations, and analyzing and quantifying economic damages in commercial and employment disputes Will O’Donnell, CPA, ASA, ABV, has been promoted to director in the business valuation practice at Evergreen Advisors, and he is based in the firm’s Columbia, Md., office; he joined the firm in 2014 and has experience in valuations associated with estate and gift tax, ESOPs, business combinations (ASC805), goodwill impairment (ASC350), IRC 409A, dissenting shareholder and oppression, Subchapter S elections, marital dissolution, and buy-sell agreements.

Firms: Enterprise, Ala.-based Carr Riggs & Ingram LLC increased its operations in Atlanta by adding Brooks McGinnis & Co. LLC of Atlanta, a firm that provides tax, audit, and accounting services, specializing in work with nonprofit organizations, privately held businesses, individuals, and employee benefit plans … Expanding its private equity practice, Richmond, Va.-based Cherry Bekaert has acquired national private equity and transaction tax advisory firm TaxGroup Partners (TGP) of Los Angeles … New York City-based CohnReznick opened a new office in Miami to accommodate its growing South Florida team … Dayton, Ohio-based Flagel Huber Flagel CPAs & Business Advisors is adding Nolan Giere & Co. CPAs of Troy, Ohio, a firm that provides tax, accounting, and advisory services to individuals and closely held businesses in industries including manufacturing, construction, distribution, professional services, food service, retail, and healthcare … Carmel, Ind.-based Blue & Co. LLC is bringing on partners M. Kristin Stuedle and Joe Stuedle and their team from Stuedle Spears & Co. PSC of Louisville, Ky.; they and their team provide consulting and tax compliance services to pass-through entities, trusts, and individuals … Chicago-based Baker Tilly is adding The Compliance Group (TCG) of Carlsbad, Calif., which provides regulatory compliance and risk management services for mortgage lenders … Atlanta-based Frazier & Deeter LLC has acquired Confluence Tax of Cambridge, England, which provides tax planning, tax compliance, and other advisory services to businesses and individuals specifically within the technology and life sciences industries.

Please send your professional and firm news to us at

CPE events

The use of multiple (free) sources of closed-end mutual fund (CEF) data and discounts and how to analyze and select guideline CEFs, focusing on relevant metrics, are discussed.

Take a fresh look and get a different perspective on multiples in the healthcare sector. The speaker is a recognized expert in his field and a frequent speaker and author on healthcare valuation topics.

Holiday Break

BVWire will be taking a break to enjoy the U.S. Thanksgiving holiday next week. We will resume publication on Wednesday, December 1. We wish you a very safe and happy holiday!

We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) at:


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