Matthews critiques Delaware’s surprise-ending opinion in FairX

Edgar Allan Poe was a master of the surprise ending, but Judge Laster of the Delaware Chancery Court is giving him a run for his money in his recent decision in the FairXchange (FairX) case. Coinbase acquired FairX in 2022, and the petitioner challenged the merger price. After spending over 30 pages of his 62-page opinion detailing how seriously flawed the sale process was, Judge Laster relied on the deal price that was the result of the very same process he condemned. The judge rejected the fair value opinions from the experts on both sides in favor of his own, which he called the “least bad” of them all. Is that what we should expect from the courts? Shouldn’t we be getting “good” valuations out of the courts?

A leading expert on Delaware statutory appraisal decisions, Gil Matthews (Sutter Securities), calls the decision “inexplicable” in an article in the upcoming October issue of Business Valuation Update in which he gives his perspective on the opinion. In all his years of covering Delaware cases, this is only the second time Mathews has criticized a decision (the other was Hintmann v. Fred Weber, Inc., a 1998 case where the court added a control premium to the value of a subsidiary).

Extra: In a blog post, veteran valuation expert Jim Alerding, BVLaw editor, gives his take on the opinion, focusing on the deal price and synergies (the court’s final value did not include synergies).

New valuation credential for healthcare compensation

A new credential is about to be launched for valuing the compensation of healthcare providers (physicians, physician assistants, and nurse practitioners). The credential (including professional standards) will be offered by the American Association of Provider Compensation Professionals (AAPCP), a relatively new nonprofit group whose members advise and lead healthcare organizations on provider compensation, contracting, planning, recruitment, retention, strategy, and, yes, valuation. The fair market value of physician compensation and related arrangements is an area subject to increasing scrutiny and complex regulations. Staffers at healthcare systems as well as external valuation experts handle the determination of FMV, and both these groups are among the ranks of AAPCP members

DealStats now includes Pure Play MVIC

In response to user requests, the DealStats database now includes a new feature: Pure Play MVIC (PPMVIC) prices and multiples. The Pure Play MVIC price creates a secondary price that includes only the market value of the target’s fixed assets and total intangibles. The Pure Play MVIC multiples are the multiples calculated using the Pure Play MVIC price. The Pure Play MVIC price and PPMVIC multiples may be helpful if you have a group of comparable companies that include asset and stock sales. The Pure Play MVIC price and PPMVIC multiples may also be helpful if you have a group of asset sale transactions where some comparables include inventory or accounts receivable and some do not. You no longer need to examine the individual transactions and adjust the selling price of your comps. This is also helpful after applying the multiples to determine what needs to be added back to reach an equity value. For more details, you can watch a short video tutorial on the new features if you click here. If you have any questions, please contact BVR at dataquestions@bvresources.com, or review the DealStats FAQ page and companion guide.

New edition of Pratt’s BV handbook for lawyers

Tired of explaining to attorneys about business valuation and how you do it? When you land that next engagement, recommend that they get a copy of the new edition of Shannon Pratt’s The Lawyer’s Business Valuation Handbook. This is the third edition of this book, which has been edited by Roger Grabowski (Kroll) and Alina Niculita (Shannon Pratt Valuations Inc.), who updated material from prior editions and added new and expanded material as well. In their review of the book, valuation experts Rob Schlegel and Penny Lutocka (both with Houlihan Valuation Advisors) say that probably the most useful item for attorneys is the “Checklist for Reviewing a Business Valuation Report” (which is also helpful to valuation experts). Also, each chapter has suggested questions the attorney should ask that are designed to probe into the details of the valuer’s work. You can read the full book review if you click here.

New minisurvey: What is the most critical issue your practice is facing?

What is keeping you up at night the most about work? Maintaining the quality of work output? Keeping up with the volume of work? Management issues? Marketing? Please take this month’s “Two-Minute Practice Builder” survey to give us your thoughts—click here to take the survey. The survey deadline is September 27, and we’ll share the results in the October 2 issue. Thanks in advance for participating!

Comments due soon on the revisions to the cheap stock guide

Comments are due soon—by September 20—on a working draft of two updated chapters from the AICPA Valuation of Privately-Held Company Equity Securities Issued as Compensation guide. The chapters address secondary market transactions, and the revisions are designed to better align with FASB ASC 820, Fair Value Measurement, and FASB ASC 718, Compensation—Stock Compensation. The new guidance will likely have significant implications for financial reporting valuations of private-company common stock underlying stock-based compensation awards.

NACVA annual conference schedule now available

BVWire is looking forward to Las Vegas and the NACVA and the Consultants’ Training Institute’s 2024 Business Valuation & Financial Litigation Super Conference December 12-13 at the MGM Grand. There will be four tracks and almost 40 sessions, plus a Pre-Conference Tri-Annual Recertification Day on December 11 (additional registration fees required), which includes a Business Valuation Report Peer Review (in-person), Industry Standards and Ethics, and Current Update in Valuations. You can attend in-person or virtually, and there is an á la carte option for virtual attendees. For details and to register, click here.

Next week: VSCPA Forensic and Valuation Virtual Conference

This year, the Forensic and Valuation Conference held by the Virginia Society of CPAs (VSCPA) September 19-20 will be virtual only. There is a good slate of topics and speakers, and, for more details and to register, click here. Up to 13 CPE credits are available.

New edition of IVS to be freely accessible

Starting in January 2025, the latest edition of the International Valuation Standards (IVS) will be freely accessible to the public in a digital format via the IVSC’s website. This change, which removes an existing paywall, coincides with the effective date of the newest edition of IVS and “represents an important step in supporting the widespread adoption and implementation of these standards across global markets,” the organization says.

V20 global valuation conference coming up in Brazil

Last year’s inaugural V20 Summit and Conference in India was a great success, and this year’s event will be in Sao Paolo, Brazil, September 30 to October 2. This year, the Brazilian Institute of Engineering Assessments and Expertise (IBAPE) hosts the event in association with the International Valuation Standard Council and the Assessors and Registered Valuers Foundation. The theme is “Valuation for Sustainability and Inclusive Growth: Bridging Finance and the Digital Divide.” The full schedule is available, and registration is open if you click here.

BV movers . . .

People: Juli Saitz, CPA, ABV, CFF, has rejoined the dispute advisory services practice of FTI Consulting, a Washington, D.C.-headquartered management consulting firm; she is in the firm’s New York City office and has more than 25 years of experience (including an earlier stint at FTI), serving as an expert witness on various court proceedings and arbitrations relating to valuation, fraud, breach of contract, and trademark and copyright infringement, among other areas … Erin Spaulding, CVA, CM&AA, has joined El Segundo, Calif.-based CriticalPoint as managing director where she will be focused on building and leading the firm’s valuation practice; she has over 20 years of experience in valuation and transaction services and will be advising clients on a range of valuation issues, including transaction advisory (fairness opinions, purchase price allocations, shareholder exits, stock-based compensation), tax compliance (transfer pricing, gift and estate planning, minority interests, ESOPs), and consulting (IP and collateral, solvency opinions, third-party report review, buy-sell agreements, restructuring, FP&A) … Jack R. Tangeman, CVA, has joined Fairfield, N.J.-based Smolin, Lupin & Co. LLC as a forensic and valuation services manager; he will be based out of the firm’s Plantation, Fla., office, and he has experience in valuation for matrimonial, estate, and shareholder dispute matters … Derek P. Smith has been promoted to senior financial analyst at Mercer Capital; he is a member of the firm’s Family Business Advisory Services Group and the Oil & Gas Industry Team and has valuation experience in engagements related to corporate planning and reorganizations, financial reporting, fairness opinions, litigation support, employee stock ownership plans, and estate and gift tax planning and compliance matters.

Firms: Salt Lake City-based Scalar LLP announced the completion of its 25,000th valuation assignment since its founding in 2009; the firm has 63 employees across offices in Salt Lake City, Dallas, and Argentina and has expertise across 409A valuations, stock options and incentive equity, gift and estate planning, transfer pricing, purchase price allocations, PE and VC portfolio valuations, derivatives, fairness opinions, solvency opinions, valuation consulting, and litigation support … Chicago-based Sikich is acquiring Saggar & Rosenberg of Rockville, Md., which provides accounting and consulting services along with tax and audit, primarily for a broad base of government contractors, nonprofit organizations, real estate companies, and federal government … New York City-based EisnerAmper is acquiring Elgin, Ill.-based CPA firm Tighe, Kress & Orr, a firm with five principals and approximately 100 colleagues that provide tax, accounting, advisory, and assurance services to startups through midmarket enterprises.

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

CPE events

BVR & CBV Panel Discussion: Global Trends and Issues in BV, September 19, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Alan Lee (Kroll), Carla Nunes (Kroll), Chris Polson (PwC), Sandra McEwen (Ontario Teachers’ Pension Plan), and Raymond Moran (FON Advisors). CPE credits: 2.0.

A stellar panel of experts present key insights on the latest trends impacting international business valuations, including ESG and AI, and more emerging issues.

Intangible Assets Missed in Appraisals of Hotels and Other RECEs, September 24, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Barry J Cunningham. CPE credits: 2.0.

Real estate appraisers who value properties that include a business operation tend to unknowingly leave intangible value in their conclusions. This session explains the problem and provides a multidisciplinary approach to solving it.