More takeaways from the Las Vegas AICPA FVS conference

In the last issue, we presented some takeaways from the first day of the AICPA & CIMA Forensic and Valuation Services (FVS) Conference in Las Vegas earlier this month. There were over 60 sessions to choose from over the three days, and here are some things we learned on the second day:

• The keynote speaker, a “focusologist,” reported that 70% of the workforce is disconnected and disengaged (“the way we’re working is not working”)—one major fix is to give more feedback to staff;

• The AICPA set up a university task force to raise awareness among students of the FVS profession;

• There is no need to use a normalized risk-free rate (for now at least) because we are now back to more normal conditions;

• For economic damages, the tricky part is segregating losses from the alleged bad act from losses resulting from other factors—a causation analysis is the key (the expert should never opine on causation but it’s fine to discuss indicia of causation);

• In a litigation matter, if you get documents dumped on you at the last minute, ask for more time but if you don’t get it, footnote it and reserve the right to do a supplement to your report; and

• If a business owns its real estate, the cleanest way is to treat it as an excess asset with the business just renting at market prices.

We’ll have takeaways from the third day in the next issue and there will be expanded coverage starting in the January issue of Business Valuation Update.

Next year’s FVS conference will be in Dallas, TX at the Hyatt Regency October 28-30, 2024.

Non-certified occasional valuer is not a qualified appraiser per Tax Court

For tax purposes, the most important requirement under the qualified appraisal rules is that the valuation be done by a qualified appraiser. The requirements are set out in Section 170 of the tax law and related regulations. A qualified appraiser is one who either has relevant credentials or enough experience. But how much experience is enough? A new case gives some guidance.

New case: In a Tax Court case involving a charitable contribution of shares in a closely held corporation, an investment banker did the valuation. He had no certifications from any professional appraiser organization and testified that had done valuations only “on a limited basis” just a year before the engagement. He also said that, at the time of the trial, he was performing business valuations for prospective clients “once or twice a year” (presumably gratis) to solicit their business. The court ruled that the investment banker was not a qualified appraiser, so the donors are not entitled to a charitable tax deduction.

There were other defects in the valuation report and other issues in the case, which is Hoensheid v. Comm’r (In re Estate of Hoensheid), T.C. Memo 2023-34, and a case digest and full opinion are available on the BVLaw platform.

Catch up on the ASA conference via recordings

We attended the ASA 2023 International Appraisers Conference in New Orleans but could not get to every session we wanted. Fortunately, the ASA makes recordings of the sessions available if you click here. Here are a few things we learned from listening to some of the recordings.

• A new study shows that customer concentration does not automatically mean higher risk—it depends on the strength of the relationships with those customers;

• When thinking about hypothetical buyers for a going-concern business, the likely buyers are those with the greatest expected synergies;

• The tax break from identifying personal goodwill when a business is sold is so significant that the IRS automatically red flags transactions that make a personal goodwill election;

• Don’t assume your business as a sole practitioner does not have value, even with non-recurring revenue—and there are alternate payment arrangements that can be done with the buyer;

• Buy-sell agreements represent a “vast opportunity” for appraisers to help draft certain provisions and to perform valuations when needed; and

• How useful are ESG ratings in valuation? Anheuser Busch would have received high ESG scores for embarking on its woke promotion for Bud Light, but look what happened (Kellogg’s Froot Loops is the latest brand to come under fire for its wokery).

Of course, being in-person at the conferences is the optimal experience (we learn a lot outside of the actual sessions), but the recordings are the next best thing. Next year’s ASA conference will be in Portland, Ore., Sept. 15-17, 2024.

New issue of Willamette’s Perspectives is released

The October 2023 issue of the quarterly digital publication Perspectives, from Willamette Management Associates, has been released and you can access it if you click here. This publication replaced the firm’s Insights publication and the articles in this latest issue are:

• “Preferred Equity in a Rising Interest Rate Environment,” (Ben R. Duffy and Jacob L. Hudson);

• “Considerations for Valuing the Stadium Seat Licenses of Sports Teams for Estate Tax Purposes” (Jackson Crispin); and

• “Convertible Bonds as a Component of a Company’s Capital Structure” (Keegan M. Pando and Weston C. Kirk). Kirk also served as editor for this issue.

Tomorrow! ASA conference on litigation

Valuation issues in litigation involving marital divorce, business breakups, shareholder disputes, and ESOPs as well as tips on giving expert testimony will be featured in a half-day conference tomorrow, November 30: ASA’s 2023 Litigation in Valuation Conference. Event chair Kenneth J. Pia (Marcum) has put a stellar list together of valuation experts: Neil J. Beaton (Alvarez & Marsal), Jay E. Fishman (Financial Research Associates), Nicholas Parseghian (Marcum), Jeffrey S. Tarbell (Houlihan Lokey), plus several attorneys and a judge. Check out the agenda and register by clicking here.

December super conference in Florida from NACVA

The year 2023 will go out with a bang with the last major conference of the year—the NACVA Business Valuation & Financial Litigation Super Conference that runs from December 14, through December 16 virtually and in-person from Fort Lauderdale, Fla. There are over 40 sessions in four tracks and you can attend the full conference or just one (or more) sessions with the á la carte option when you attend virtually, and each session you choose is $110 ($99 for NACVA members). Up to 30 CPE hours are available. You can find more information and how to register if you click here.

Here are the winners of the BV Challenge in Canada

The CBV Institute has announced the winners of its second Business Valuation Challenge, a national case competition for undergraduate students from top business schools across Canada. The competition saw 21 teams (69 students) test their business valuation skills, and here are the top three teams:

• British Columbia Institute of Technology (BCIT): Paul De Blois, Maya Khera, Jin Wook Ryu, and Sangbeom Woo;

• Concordia University: Andreana Moulinos, Paulina Moulinos; and

• Toronto Metropolitan University: Billy Arseneault, Dennis Chen, George Chibukhchyan, and Vansh Saini.

The top three teams received cash awards, and the members of the first-place team will receive complimentary enrollment to Level 1 in the CBV Program of Studies.

“I would like to take this opportunity to congratulate the members of the first-place team from British Columbia Institute of Technology, along with those who placed second and third,” said Dr. Christine Sawchuk, president and CEO, CBV Institute. “With demand for CBVs at an all-time high, the BV Challenge is an excellent opportunity to introduce undergraduate business students to our rapidly expanding and evolving profession. We look forward to further growing this case competition in the coming years with the goal of exposing even more students to the dynamic and rewarding world of business valuation.”

More details on the competition are available if you click here.

Reminder: IVSC seeks board members

The International Valuation Standards Council (IVSC) is seeking applications for roles on three of its technical standards boards, with two openings on each of the Tangible Assets Board, Business Valuation Board, and Financial Instruments Board. The new board appointees will start their terms in the second quarter of 2024. Applications can be submitted online through the IVSC website, and the closing date for applications is Monday December 18, 2023. For more information, click here.

Categories: global business valuation
Tags: global business valuation education, international business valuation, international valuation standards council (IVSC)

BV movers . . .

People: Erica Pavlovich, CPA, CFF, ABV, has joined 4 Corners Financial Forensics as a senior forensic accountant; she performs forensic accounting, business valuations, and economic damages services both in and out of litigation settings across various industries and for a variety of purposes … Greg Smith, ASA, has joined Willamette Management Associates as a managing director in the firm’s Boston office; formerly with Kroll, he has more than 20 years of experience in the areas of business and asset valuation, corporate finance, and strategic planning.

Firms: Mazars and Forvis have formed a global alliance under the brand Forvis Mazars, part of a larger deal aimed at establishing a global audit and advisory network with an estimated annual revenue of $5 billion … Cleveland-based Cohen & Company has acquired Szymkowiak & Associates CPAs and PEAR Consultants, both of Buffalo, N.Y.; the former focuses on tax, assurance and advisory services and the latter is a tax consulting firm … Minneapolis-based Nepsis, a financial advisory and investment management firm, has acquired Sevenich, Butler, Gerlach, & Brazil of Saint Paul, Minnesota, a firm that provides tax, accounting and consulting services, including business valuations … Atlanta-based Aprio LLP has merged with Rubens Partners LLP of Lafayette, Calif., which provides accounting, tax, and advisory services, including business valuation … Tucson, Ariz.-based BeachFleischman PLLC is merging in Nogales, Ariz.-based Jeong Lizardi PC, which provides tax, accounting and business advisory services … New York-based EisnerAmper LLP will be joined by New York City-based Spielman Koenigsberg & Parker (SKP), an accounting, tax, and consulting firm with six partners and a staff of more than 60 professionals.

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

CPE events

Data as a Commercial Asset: Valuation Techniques and Analytical Insights (A BVR Workshop), December 1, 10:00 a.m.-1:15 p.m. PT/1:00 p.m.-4:15 p.m. ET. Featuring: Michael Blake (High Score Strategies). CPE Credits: 3.5.

Learn about data valuation methodologies as well as analytical points that help distinguish the relative values of different data sets.

Excel Tricks and Tips for BV Professionals: A Hands-On 3-Hour Workshop. December 6, 10:00 a.m.-1:15 p.m. PT/1:00 p.m.-4:15 p.m. ET. Featuring: James Herr (Alvarez & Marsal Valuation Services). CPE Credits: 3.5.

Learn shortcuts and efficiency-saving tools for working with Excel models used in valuation. Participants will receive an Excel exercise book and a quick reference sheet.