AICPA releases draft of business combinations guide

The AICPA seeks comments on its newly released Draft Accounting and Valuation Guide, Business Combinations. This guide provides guidance and illustrations regarding the accounting and valuation considerations for business combination transactions. It addresses many accounting and valuation issues that have emerged over time and will help preparers, auditors, and valuation specialists understand and comply with the requirements of FASB ASC 805, Business Combinations, and FASB ASC 820, Fair Value Measurement. Comments are due by Jan. 15, 2023 (see the document for how to submit comments). To download the working draft, click here.

On-the-ground report from the ASA International Conference

Appraisers from all disciplines met in Tampa, Fla., and online for the ASA 2022 International Conference September 10-12. BVWire was there along with hundreds of attendees on site—somewhat of a return to prepandemic normalcy. At all the sessions we attended, speakers were live and on-site. Here are some big-picture highlights—more detailed coverage of the sessions will be in the November issue of Business Valuation Update.

Three pillars: Johnnie White, ASA’s CEO, welcomed the attendees and outlined the organization’s strategic plan built around three “pillars”: (1) membership; (2) education; and (3) branding. The ASA has been experiencing some challenges with respect to membership levels (partly because of the aging of the profession), so efforts are underway to attract and retain members better, particularly younger members. Also, educational content is being increased with the addition of more on-demand learning and specialty conferences (such as the recent inaugural ESOP conference). As for branding, a PR firm has been hired to help elevate the ASA brand in the appraisal profession (brand logos have been sent to all members).

Economy: The Fed “will not back off” and will keep raising rates until it sees “serious progress,” said keynote speaker LaVaughn M. Henry, former White House economic advisor and senior regional officer and vice president for the Federal Reserve Branch in Cincinnati. There will be slowing growth over the next six months but not necessarily a recession. Henry noted that Bank of America backed off on its prior forecasts of a recession this year, now saying “maybe” next year. (Note: Henry’s remarks were made before last week’s market plunge.)

Shannon Pratt Award: The recipient of the inaugural Shannon Pratt Award is Roger Grabowski (Kroll). Jay Fishman (Financial Research Associates) and Ken Pia (Marcum) presented him with the award. Recently, Grabowski spearheaded the effort to publish the sixth edition of Pratt’s Valuing a Business.

‘ESG Ratings: A Compass Without Direction’

That’s the title of a new paper out of the Stanford Graduate School of Business that examines the concerns over the reliability of the various ratings schemes for environmental, social, and governance (ESG) factors. ESG has become a “new” hot topic (although much of it has been around for years) in the investment world, and it, of course, has implications for valuation. But the various ratings that have emerged are (still) not ready for prime time. “We find that while ESG ratings providers may convey important insights into the nonfinancial impact of companies, significant shortcomings exist in their objectives, methodologies, and incentives which detract from the informativeness of their assessments,” the authors write.

The paper is available if you click here. The authors are David F. Larcker (Stanford University), Lukasz Pomorski (AQR Capital Management), Brian Tayan (Stanford University), and Edward M. Watts (Yale School of Management).

Extra: The IVSC has a perspective paper, “ESG and Business Valuation,” that represents an early step toward developing a systematic approach to the incorporation of ESG into business valuation practice and standards. To access the IVSC paper, click here.

A ‘field guide’ to BV just released

Based on all of the questions business owners have asked them over the years, appraisers Casey Karlsen and Seth Webber of BerryDunn have put together a helpful book, A Field Guide to Business Valuation. Written in an easy-to-understand style, the book uses a case study example that winds through the entire book to clearly illustrate the valuation concepts discussed clearly. This book is designed for owners and leaders of private businesses, but it will also help valuers give clear answers to questions from their clients that they are sure to get. To see the Table of Contents and Introduction, click here. A PDF version is available now, and the print version will ship by the end of September.

Two state CPA society BV conferences coming up back-to-back

BVWire has had the pleasure of attending valuation conferences various state CPA societies sponsored. Two such events are coming up later this month.

New Jersey: The New Jersey CPA Society will hold its Forensic and Valuation Services Conference on September 28 as a live webcast. Sessions will focus on fraud detection, fraud prevention, and business valuation. For details and to register, click here.

Virginia: The Virginia Society of CPAs (VSCPA) will hold its annual two-day Forensic and Valuation Conference September 29-30 both in-person and online. Sessions include deep dives into the income and market approaches, practice management, asset tracing, surviving cross-examination, estate/gift engagements, and more. For details and to register, click here.

Reminder: Survey of young ASA BV practitioners

The American Society of Appraisers, together with Business Valuation Resources (BVR) and the recruiting firm Borrowman Baker, is conducting a survey of ASA members under the age of 40 whose primary discipline is business valuation. The goal is to gain some insights and perspectives to help the profession better attract and develop the younger generation of practitioners. If you are an ASA member under 40 in the BV discipline, you should have received a link to the survey. If you have not, send a note to info@bvresources.com and we will send you a link. Responses are strictly confidential and anonymous and will contribute to the continued advancement of the profession. The survey will be open until September 30. Thank you in advance for participating!

Student BV Challenge launched in Canada

The CBV Institute has launched its inaugural Business Valuation Challenge, a national case competition for undergraduate students from top business schools across Canada. Student teams will compete with students from other universities in a test of their business valuation skills. A case study has been developed by a team of Chartered Business Valuators (CBVs) and refined for a university audience. All participants will have the opportunity to attend a training session to learn the basics of business valuation that can be applied to the case study. The registration period is from September 13 to October 14, and the competition dates will be November 17-18. More details are available if you click here.

BV movers . . .

People: Chris Johnson, MAI, SRA, AI-GRS, ASA, has joined Newmark Valuation & Advisory as a senior managing director; he provides valuation and consulting services on real estate-centric businesses, such as shopping centers, apartment complexes, hotels, funeral homes, surgical centers, and recreational vehicle parks … Business appraiser Robert Morrison (Rosenfield & Co. PLLC), real property appraiser Lorrie Beaumont (LB Appraisal Associates Inc.), and machinery and technical specialties expert Sharon Desfor (HeliValue$ Inc.) have been conferred the designation of Fellow (FASA), the highest honor the American Society of Appraisers bestows … Miami-based Fiske & Co. has admitted Katie Gilden, CPA/ABV/CFF, CFE, CVA, to its partnership; she joined the firm in 2009 and has been the firm’s COO since 2020, overseeing the firm’s overall operations and strategic planning and has also been involved with the forensic accounting and business valuation litigation support practice.

Firms: Enterprise, Ala.-based Carr Riggs & Ingram LLC (CRI) is adding Brown, Nelms & Co., a firm based in Peachtree City, Ga., which specializes in construction industry clients, offering services including tax, accounting, auditing, financial reporting, strategic planning, M&A advisory, ownership transitions, employee stock option plans, and retirement plan audits … FORVIS (the new firm name for the merger of BKD and DHG) is acquiring Louisville, Ky.-based ProBank Austin, a firm that provides education, loan review, regulatory compliance, asset/liability and interest rate risk management, and capital advisory services to financial institutions.

CPE events

• Normalizing Owner Compensation + RCReports Case Study, September 28, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Paul Hamann (RCReports) and Stephen Kirkland (Atlantic Executive Consulting). CPE credits: 2.0.

This webinar is for business valuators involved in shareholder litigation over compensation and tax advisors who help closely held businesses during IRS audits.

• Unique Challenges in Valuing A/E Firms With an Industry Update, October 11, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Kevin R. Yeanoplos (Brueggeman and Johnson Yeanoplos PC). CPE credits: 2.0.

This session will provide insights on value drivers for architectural and engineering firms and the status of the industry.