BVR Logo October 6, 2021 | Issue #229-1

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

BV book alert: Two important titles are in the works

Two books that all valuers should have on their shelves will soon have new editions!

Understanding Business Valuation, by Gary Trugman (Trugman Valuations), will come out with its new (sixth) edition in early 2022. Acclaimed for its easy-to-understand explanations of complex topics, the book draws on the author’s long and practical experience to present real-world examples on how to apply valuation theory. The new edition will also include an access link to court cases from the BVLaw platform as well as a companion website with ancillary materials designed to keep you up-to-date on key matters.

Valuing a Business, by Shannon Pratt, will also come out with its new sixth edition, scheduled for a March 2022 release. The book, first published in 1981, is being published with underwriting sponsored by the American Society of Appraisers Educational Foundation. Pratt is now retired, but the ASA has assembled a group of contributors to bring the book up-to-date and maintain Pratt’s legacy for the valuation profession.

Stay tuned for more details on these two volumes as they develop.

Record attendance at VSCPA conference

Again this year, BVR was pleased to sponsor the two-day Virginia Society of CPAs Forensic and Valuation Services Virtual Conference, which saw record attendance, reports Harold Martin (Keiter), who served as chair of the conference planning task force. Excellent speakers presented a lot of great information, and here are a few interesting bits of information we picked up:

  • Pre-COVID-19 valuations may not be useful, so consider using a “hypothetical situation” to do two valuations as of the same date (one with impacts of COVID-19 and one without)—this complies with SSVS and USPAP;
  • Several speakers remarked that business at their practices dipped during 2020, but it’s rebounded in 2021—and then some (“we’re slammed,” “our best year in decades,” “a lot of estate and gift work”);
  • A case to watch: A court in Arizona KO’d the use of a calculation report, but the appellate court ruled it was wrong to do that and sent the case back to the lower court (the case, Larchick v. Pollock, is in BVLaw);
  • Developing the proper statistical model for lost profits analysis hinges on understanding the drivers of—and trends in—firm performance;
  • Tax proposals in Washington seek to eliminate valuation discounts for family limited partnerships and personal holding companies, but it’s a narrower provision than the 2017 proposed Sec. 2704 regs that targeted estate valuation discounts for minority interests;
  • When doing forensics, you need a definite methodology (e.g., the IRS uses financial status audit techniques (FSAT));
  • The biggest problem with determining reasonable compensation is dealing with owners with two hats—as an owner and also as an employee/executive—where there is a commingling of compensation and profit; and
  • An FBI agent spoke on cybersecurity and noted that each of the 56 FBI field offices have a least one cyber squad investigating ransomware and other cyber crimes.

Much more coverage of the conference will be in the November issue of Business Valuation Update.

Insurer not required to defend valuation firm in ESOP lawsuit

A valuation firm can no longer force its professional liability insurer to defend a lawsuit challenging the firm’s ESOP valuation because the case’s surviving claim falls under a policy exclusion, a federal court has ruled. While the policy covered valuation services, the policy also featured an exclusion for claims against the insured for securities violations. The insurer’s duty to defend the firm ended when the ESOP participants suing the firm filed an amended complaint that included only one claim for federal securities fraud. The policy featured an exclusion for claims against the insured for securities violations.

The case is Great Am. Fid. Ins. Co. v. Stout Risius Ross, Inc., 2021 U.S. Dist. LEXIS 158553; 2021 WL 377 (Aug. 23, 2021). A case analysis and the full opinion are available on the BVLaw platform.

Free model adjusts ROI distortion from missing intangibles

Intangible assets that are “missing” from corporate balance sheets (see prior coverage) distort performance metrics and generally overstates return on capital. In a new article, the authors suggest adjustments to correct for this distortion—and they provide a free interactive model to illustrate. They demonstrate the model by calculating an intangible asset adjusted return for Amazon. The article and model, from The Footnote Analyst, is available if you click here.

Newest What It’s Worth guide examines insurance agencies

What makes insurance agencies and brokerages tick? How are changes in the industry impacting firms? What’s the best valuation approach? Get the answers to these questions and more in the new guide, What It’s Worth: Valuing Insurance Agencies. The report draws upon the best benchmarking data and industry research sources available, summarizes key insights and appraisal factors, and will help guide your professional judgment in determining a conclusion of value that is as reliable as ever. Check out the table of contents if you click here. Note: You already have access to this new guide if you are a subscriber to the BVResearch Pro platform!

Want to help develop global standards for valuing financial instruments?

Here’s a great chance to give back to the valuation profession. The International Valuation Standards Council (IVSC) is looking for someone to help write and lead the international approach to valuing financial instruments. The candidate would have to be able to make a commitment (flexible) of 30% of his or her time per week for nine to 18 months, so the support of the candidate’s firm or organization is important. The role would be to support the lead financial instruments director in efforts to further develop the International Financial Instruments Standards of the IVSC. If you are interested in this opportunity, click here for more details and how to apply.

IVAS-IVSC conference starts today

The leading business valuation conference in Asia Pacific has been the IVAS-IVSC Business Valuation Conference, and this year’s two-day event starts today, October 6. Environment, social, and governance (ESG) factors as well as intangible assets are a major part of the agenda, and the conference theme is “Reframing Valuations: Intangibles, ESG, and Long-Term Value.” The event is organized by the Institute of Valuers and Appraisers, Singapore (IVAS) in partnership with the International Valuation Standards Council (IVSC). For more information and to register, click here.

BV movers . . .

  • People: Cheryl Wittmann, CPA, CVA, has been admitted as a partner at Madison, Wis.-based Wegner CPAs; she is in the firm’s tax and business services practice … Robert Allen CFA, ABV, has earned the Certified in Entity and Intangible Valuations (CEIV) credential from the American Institute of Certified Public Accountants (AICPA); he is a forensic, litigation, and valuation managing director at Fort Worth, Texas-based Whitley PennAllison Guice, CPA/ABV, CVA, PFS, CFP, has been admitted as a principal at Montgomery, Ala.-based Jackson Thornton; she provides business valuation and tax consulting/estate planning services to clients throughout the Southeast.

    Firms: Bellingham, Wash.-based VSH CPAs is adding Ahn Tax & Business Advisors (ATBA), also of Bellingham, a firm that specializes in partnerships, real estate, professional services, cross-border business, foreign asset holdings, and taxation of U.S. persons living abroad … Gainesville, Fla.-based James Moore & Co. is acquiring the tax and accounting division of Canopy 360 of Ocala, Fla. … Spoor Bunch Franz (St. Petersburg, Fla.) is adding Dwight Darby & Co. of Tampa, Fla., a firm that represents a variety of industries, including condo/homeowners’ associations, employee benefit plans, nonprofit, professional services, real estate development, automotive dealerships, insurance, and restaurants.

    Please send your professional and firm news to us at

CPE events

Professor Abbott continues to refine his methodology for separating active and passive appreciation of assets in divorce cases. His method is designed to be based on sound theory, good empirical evidence, and a clear common-sense framework.

This is a review of important 2021 gift and estate tax valuation cases and the latest transfer tax proposals making their way through Congress.

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


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