April 25, 2007 Teleconference

Defining, Measuring & Defending Discounts for Lack of Liquidity

Featuring Ashok Abbott of Business Valuation, LLC, Shannon Pratt of Shannon Pratt Valuations, and Rob Schlegel of Houlihan Valuation Advisors

Telephone Dial-In Audio Conference
Wednesday, April 25, 2007

10:30am-12:10pm PDT / 11:30am-1:10pm MDT / 12:30pm-2:10pm CDT / 1:30pm-3:10pm EDT

Presented by Business Valuation Resources, LLC
Earn TWO INTERACTIVE CPE credits for participating in this conference

PRICE: $249.00 for a single dial-in connection. Use your conference room and the whole office can listen in. Two CPE credits are available for each additional listener sharing the same phone connection - only $49.00 per person.

Register for conference for $249

Register for conference and CD for $339

Register for conference and Transcript for $339

Register for conference, CD, and Transcript for $429

Why You Should Attend:
Don't miss Ashok Abbott, Shannon Pratt, and Rob Schlegel as they discuss and debate all key issues of illiquidity. You will walk away with  hands-on guidance on applying discounts for lack of liquidity.

Learning Objectives:

  • Learn the distinguishing features between liquidity and marketability

  • Learn how to measure discounts for lack of liquidity and the cost of going public

  • Learn how to apply our model using recent court cases

  • Learn how to utilize this area's new research in your practice

Program Outline:

  • Defining, Measuring & Defending Discounts for Lack of Liquidity Presentation:

  • Introduction, Trends & Concepts

    • Levels of Value
    • Discount Landscape
    • Core Concepts
    • Marketability & Liquidity: What’s the Difference?
    • Liquidity Differences within Marketability Classes
  • Publicly Traded Equivalent Value

    • Liquidity Assumptions of the Publicly Traded Equivalent Value
    • Core Issue in Liquidity: Immediacy
    • Effect of Liquidity on Security Pricing & Returns
    • Bid-ask Spread & Liquidity
    • Recent Changes in Market Liquidity
  • Changes in Market Liquidity & Private Companies
    • Market Profile : Large Stocks
    • Market Profile: Small Stocks
    • Security Markets Liquidity
  • Holding Period Vs. Liquidation Period

    • Holding Period
    • Liquidation Period
    • Discount for Lack of Liquidity
    • Mean Liquidation Period: Small Firms
    • Mean Liquidation Period: Large Firms
    • Price Pressure
    • Market Failure
    • Price Risk
  • Marketability Discount Approaches

    • Empirical Studies
    • Quantitative Marketability Discount Model
    • Is Bajaj Right?
    • Put Option Based Models
    • Look Back Put
  • Issues for Consideration

    • Abbott Index: Cost of IPO and DLOL
    • Marketability: Cost of IPO
    • Qualitative Costs of an IPO
    • Reported Costs of an IPO
    • IPO Sample Results
    • IPO Costs: Explanatory Factors
    • Regression Results: IPO Costs
    • Average Market Capitalization for Decile Rankings
    • Cost of IPO: Example
  • Cost of Liquidity: Discount for Lack of Liquidity

    • Longstaff Look Back Put
    • Block Size and DLOL
    • Large-Firm DLOL Estimation
    • Small Firm DLOL Estimation
  • Applying the Theories

    • Tax Cases Phase I
    • Tax Cases Phase II
    • Where Do We Go From Here?
  • Audience Questions and Concluding Remarks

Featured Panel:

Ashok Abbott, Ph.D.

Ashok B. Abbott is Associate professor of Finance at West Virginia University, Morgantown, West Virginia. He has also taught at the Graduate school of Credit and Financial Management held at Dartmouth and Stanford University.

Professor Abbott received his M.B.A. (Finance) at Virginia Polytechnic Institute and State University (VPI&SU), Blacksburg, VA, in 1984, followed by a Ph.D. in finance, also at VPI&SU, in 1987. His Ph.D. dissertation title was "The valuation effects of tax legislation in corporate sell-offs". Professor Abbott has over twenty years of experience in evaluation of businesses as a senior bank lender and as a business appraiser.  He is a consultant to valuation firms in the areas of DLOL and DLOM. ( S&P, Duff and Phelps, Willamette) Small Business Administration 
recognized Professor Abbott as the Small Business Advocate-Journalist for the year 2002.

He has received frequent recognition and awards for his teaching. Best Teacher Award College of Business 1993, Best Teacher Award Division of Economics and Finance 1995, and Lifetime Investment Award ( Best Teacher Award) given by Executive MBA graduating Class 1999. Professor Abbott has published extensively in scholarly research journals and made presentations at national and international conferences, some recent ones pertaining to BV discipline include:

  • “Untangling the Web of Discounts: Marketability, Liquidity, and Control Issues in Valuation”, Valuation Strategies, August 2004

  • “Strategic Flexibility and Firm Performance: The Case of US Based Transnational corporations”, Global Journal of Flexible Systems Management, 2003 Vol4, Nos. 1&2, pp1-8 (lead article), with Kunal Banerji

  • “Discount for lack of marketability: evidence from NASDAQ delistings”,
    Business Valuation Review, December 2003

  • “New Flexible Paradigms in Equity Valuation: Knowledge Based Enterprises”,
    Global Journal of Flexible Systems Management-   2001 Vol 2. No.1

  • "Role of liquidity in Asset Pricing", proceedings of International Conference on Business and Finance, December 2004, Hyderabad, India

  • “Untangling the Web of Discounts: Marketability, Liquidity, and Control Issues in Valuation”, proceedings of Institute of Business Appraisers Meeting, Las Vegas, June 2004

  • "Re-examining the Risk and Return effects of Joint Ventures",
     proceedings of Hawaii International Conference on Business” Honolulu, June 2004, with Tuncer Gocman

Shannon Pratt, CFA, FASA, MCBA, CM&AA

Dr. Shannon Pratt is a managing member of Shannon Pratt Valuations, LLC and is the founder of Business Valuation Resources, LLC. He is also one of the founders of Willamette Management Associates and was a managing director of Willamette for almost 35 years.

He has performed valuation assignments for the following purposes: transaction (acquisition, divestiture, reorganization, public offerings, public companies going private), taxation (federal income, gift, and estate and local ad valorem), financing (securitization, recapitalization, restructuring), litigation support and dispute resolution (including dissenting stockholder suits, damage cases, and corporate and marital dissolution cases), and management information and planning. He has also managed a variety of fairness opinion and solvency opinion engagements.

Dr. Pratt has performed business and stock appraisals in the following industries: accounting and consulting, advertising, aluminum, apparel, appraisal, architecture and engineering, automobile distributors and dealerships, automobile parts manufacturing, automobile repair and servicing, aviation, banking, bottling, breweries, brokerage, concrete, chemical, computer services, construction and contracting, consumer finance, distribution, education, entertainment, fast food, food service, forest products, funeral homes, health care, hotel and hospitality, insurance, leasing, manufacturing, medical and dental practice, mining and mineral extraction, petrochemical, printing, publishing, radio broadcasting, railroads, real estate development, recreational services, restaurant, retailing, ship repair, shipping, steel, telecommunications, television broadcasting, textile manufacturing, transportation and trucking, utilities, wholesaling, and wineries.

Dr. Pratt has testified on hundreds of occasions in such litigated matters as dissenting stockholder suits, various types of damage cases (including breach of contract, antitrust, and breach of fiduciary duty), divorces, and estate and gift tax cases.

Rob Schlegel, ASA, MCBA

Robert C. Schlegel, ASA, MCBA, works closely with Houlihan Smith & Company on complex financial opinions and financings and is a Principal with Houlihan Valuation Advisors. Rob's professional background includes extensive work in business appraisal, marital and partnership dissolutions, estate planning, market studies, statistical analysis, and forensic accounting. He has testified as an expert in Federal and Indiana courts and has directed numerous studies of business value, lost profits, pension and stock option issues, and intellectual property matters.

A frequent author and trainer, his most recent publications include article in Fair Share, the Matrimonial Law Monthly, the Matrimonial Strategist, the Indiana Lawyer, the Handbook of Business Valuation, and the Personal Property Journal from the American Society of Appraisers ("ASA"). During the past twenty years, Rob has addressed many regional and international conventions, including COMDEX, the national computer convention. Locally, he has led workshops on corporate finance and building business value for the Small Business Administration, the Planning Forum, the Indiana Institute for New Business Ventures, the Indiana Personnel Association, the Institute of Management Accountants, and the Better Business Bureau. Rob teaches financial statement analysis and valuation-related courses regularly for the Indiana CPA Society, and is a national instructor for the Institute of Business Appraisers and the ASA. During 1997, 1998, 2000 and 2002, he provided seminars on business valuation and estate issues for ICLEF, the Indiana Continuing Legal Education Forum.

Rob's business career includes technical systems work for Burroughs Corporation
in the 1960's and the U.S. Marine Corps in the early to mid-1970's. He served on the faculty of the Weatherhead School of Management at Case Western Reserve University for three years teaching courses in personnel, economics, organizational behavior, and information system design. Previously, Rob directed management advisory services practices for Price Waterhouse in Central Illinois, McGladrey & Pullen in the Indiana-Tennessee region, and Ford, Brinkerhoff & Koehler in Indianapolis.

Rob holds an undergraduate degree in Economics (Occidental), a Master's degree in Labor and Industrial Relations (Michigan State), and completed his Ph.D coursework in Management (ABD/Management Information Systems Decision Systems/Case Western Reserve). A member of the panel of commercial arbitrators for the Better Business Bureau, Rob also holds a membership in the ASA, the Institute of Business Appraisers, and the National Association of Business Economists. He has received professional designations in business appraising (Master Certified Business Appraiser/Institute of Business Appraisers, and Accredited Senior Appraiser/ASA) plus four technical designations in information systems management. Rob served as President of the Indiana Chapter of the ASA from July 1998 through June 2000, and as the Society's State Director from July 2000 through June 2002. An Elder in the Presbyterian Church, Rob and his family reside in Lawrence, Indiana.

CPE Credit Information

Earn 2 Interactive CPE Credits (Consulting Services)
Business Valuation Resources, LLC is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN 37219-2417. www.nasba.org NASBA Sponsor

Please note: To receive CPE credit, you must fill out the post conference survey. The survey link is e-mailed to participants along with the dial-in number and registration code, normally sent two or more days prior to the conference. CPE credit only registrants will be sent the survey link via e-mail.

Satisfaction Guaranteed:
For more information on this telephone conference or our past telephone conferences, please email customerservice@bvresources.com Business Valuation Resources offers a 100% money-back guarantee. If you are not completely satisfied, you may submit a written request within 30 days of the date of this program to receive a full refund. Please e-mail our accounting manager at: cassandrad@bvresources.com . There are no fees associated with refunds.