Introduction to Business Valuation & Understanding the Engagement

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A thorough overview of the business valuation process

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Introduction to Business Valuation & Understanding the Engagement

  1. 1. Business Valuation Fundamentals for CPAs –A Five-Part Webinar Series Part One: Introduction to Business Valuation & Understanding the Engagement Presenter Jason Pierce CPA, CMA, CFM, CVA, CFFA
  2. 2. DISCLAIMER The Information contained in this presentation is only intended for general purposes. It is neither intended nor should it be construed as either legal, accounting, and/or tax advice nor as an opinion provided by the Consultants’ Training Institute (CTI), the National Association of Certified Valuation Analysts (NACVA), the presenter or the presenter’s firm. The material may not be applicable or suitable for the reader’s specific needs or circumstances. Readers/viewers may not use this information as a substitute for consultation with qualified professionals in the subject matter presented here. Lastly, all rights are reserved. No part of this work covered by the copyrights herein may be reproduced or copied in any form or by any means without the express permission of the presenter(s), the CTI or NACVA.
  3. 3. Continuing Professional Education (CPE) Attestation for this Webinar Program Level: Basic Delivery Method: Group-Internet-Based Prerequisites: None CPE Credits: Two (2) hours Advanced Preparation: None Fields of Study: Specialized Knowledge & Applications The presentation will include periodic online questions to assess continuous participation and to determine the program's effectiveness. Registration is on a per-person basis and allows access to one phone line. For an additional fee, others from the same office may attend and listen to the presentation via a conference phone. However, under NASBA rules, where a group attends via a conference phone (where your participation cannot be measured), only one attendee, the primary registrant, may receive NASBA qualified CPE. All other attendees will receive CPE credit, which may qualify for CPE in your state based on its applicable rules, but will certainly be qualified CPE for purposes of recertifying a NACVA credential if you are a credentialed member of the Association. The National Association of Certified Valuation Analysts 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. Web site: www.nasba.org
  4. 4. <ul><li>Jason specializes in litigation and business valuation work at an RSM McGladrey network firm.  He is a graduate of the University of Tennessee (BS) and the University of Alaska Anchorage (MBA).  Jason is an adjunct professor for Alaska Pacific University and Danube University in a variety of subjects. He is a frequent instructor and technical reviewer for NACVA as well as Alaska’s NACVA State Chapter president.  Jason also volunteers his time for a number of non-profit organizations, including the AICPA’s Financial Literacy campaign.  Recently, he was recognized as one of NACVA’s outstanding members. </li></ul>Jason Pierce, CPA, CMA, CFM, CVA, CFFA
  5. 5. Evolution of Business Valuation <ul><li>How much is this business worth? </li></ul><ul><li>It all starts with Alcohol and Money </li></ul>
  6. 6. <ul><li>ARM 34 </li></ul><ul><li>Issued in 1920 </li></ul><ul><li>To determine the amount of “intangible value” lost by businesses previously involved in the alcoholic beverage industry </li></ul><ul><li>Introduced </li></ul><ul><ul><li>Goodwill </li></ul></ul><ul><ul><li>Capitalization of excess earnings </li></ul></ul>Evolution of Business Valuation
  7. 7. Evolution of Business Valuation <ul><li>It all ends with Death and Taxes </li></ul>
  8. 8. Evolution of Business Valuation <ul><li>IRS Revenue Ruling 59-60 </li></ul><ul><li>Issued in 1959 </li></ul><ul><li>Regarded as single most important piece of valuation literature </li></ul><ul><li>Related to Gift and Estate Taxes </li></ul><ul><li>Outlined methods and factors to be used in valuing closely held businesses </li></ul>Concept
  9. 9. Rev. Rul. 59-60 Relevant Factors <ul><li>The nature and history of the business. </li></ul><ul><li>The economic outlook in general and the condition and outlook of the specific industry in particular. </li></ul><ul><li>The book value of the stock and the financial condition of the business. </li></ul><ul><li>The earnings capacity of the business. </li></ul><ul><li>The dividend-paying capacity of the business. </li></ul><ul><li>Whether or not the business has goodwill or other intangible value. </li></ul><ul><li>Sales of the stock and the size of the block of stock to be valued. </li></ul><ul><li>The market price of stocks of corporations engaged in the same or similar line of business having their stocks traded in a free and open market either on an exchanged or over-the-counter. </li></ul>
  10. 10. Evolution of Business Valuation History of Internal Revenue Service Pronouncements
  11. 11. Evolution of Business Valuation <ul><li>Financial Accounting Standards Board (FASB) </li></ul><ul><li>Issuance of Financial Accounting Statements No.: </li></ul><ul><li>1995 – 123 Stock-Based Compensation </li></ul><ul><ul><ul><ul><li>Revised in 2004 </li></ul></ul></ul></ul><ul><li>2001 – 141 Business Combinations </li></ul><ul><ul><ul><ul><li>Revised in 2007 </li></ul></ul></ul></ul><ul><li>– 142 Goodwill & Other Intangible Assets </li></ul><ul><li> – 144 Impairment or Disposal of Long-lived Assets </li></ul>
  12. 12. Professional & Regulatory Bodies <ul><li>Internal Revenue Service (IRS) </li></ul><ul><li>Considered as a primary theoretician in the field of valuation of closely held businesses. </li></ul><ul><li>Note: Revenue Rulings do not have the force of Law. </li></ul>
  13. 13. Professional & Regulatory Bodies <ul><li>FASB 141R – Requirements for valuing identifiable intangible assets acquired, in a business combination. </li></ul><ul><li>FASB 142 – Measures of impairment testing of intangible assets. </li></ul>Financial Accounting Standards Board Significant Pronouncements FASB 123R – Accounting for Stock-Based Compensation.
  14. 14. <ul><li>The United States Department of Labor (DOL) </li></ul><ul><li>Issues regulations specifically pertaining to business valuations for Employee Stock Ownership Plans (ESOP’s) </li></ul>Professional & Regulatory Bodies
  15. 15. <ul><li>National Association of </li></ul><ul><li>Certified Valuation Analysts (NACVA) </li></ul><ul><li>Founded in 1990 </li></ul><ul><li>Approximately 6,000 professionals </li></ul><ul><li>Mission is to provide resources to members and enhance their status, credentials, and esteem in the field of performing valuations and other advisory services. </li></ul><ul><li>NACVA is the premier organization of professionals representing the dominant force in business valuation, financial forensics and the industry’s hottest growth niches. </li></ul>Professional & Regulatory Bodies
  16. 16. Professional & Regulatory Bodies <ul><li>National Association of </li></ul><ul><li>Certified Valuation Analysts (NACVA) </li></ul><ul><li>Pioneers in the industry providing the esteemed Certified Valuation Analyst (CVA), Accredited Valuation Analyst (AVA) and Certified Forensic Financial Analyst (CFFA) designations. </li></ul><ul><li>CFFA Specialties include: </li></ul><ul><ul><li>Forensic Accounting </li></ul></ul><ul><ul><li>Financial Litigation </li></ul></ul><ul><ul><li>Business and Intellectual Property Damages </li></ul></ul><ul><ul><li>Business Fraud Deterrence, Detection and Investigation </li></ul></ul><ul><ul><li>Matrimonial Litigation Support </li></ul></ul><ul><li>The industry’s foremost Continuing Professional Education organization through the Annual Consultants’ Conference, Consultants’ Training Institute, Online Learning Lecture Series and Tri-Annual State Chapter Meetings. </li></ul>
  17. 17. <ul><li>Other Professional Organizations </li></ul><ul><li>American Institute of Certified Public Accountants * SSVS #1 </li></ul><ul><li>Appraisal Foundation - USPAP </li></ul><ul><li>American Society of Appraisers </li></ul><ul><li>Institute of Business Appraisers </li></ul><ul><li>Institute of Management Accountants – SMA on BV </li></ul><ul><li>Canadian Institute of Chartered Business Valuators </li></ul>Professional & Regulatory Bodies
  18. 18. <ul><li>Polling Question </li></ul><ul><li>Please rate your experience in the field of business valuation. </li></ul><ul><ul><ul><li>A. None </li></ul></ul></ul><ul><ul><ul><li>B. Nominal </li></ul></ul></ul><ul><ul><ul><li>C. Modest </li></ul></ul></ul><ul><ul><ul><li>D. Seasoned </li></ul></ul></ul><ul><ul><ul><li>E. Extensive </li></ul></ul></ul>
  19. 19. Purposes of Business Valuation <ul><li>Litigation </li></ul><ul><li>Partnership Disputes </li></ul><ul><li>Dissenting Shareholders </li></ul><ul><li>Divorce </li></ul><ul><li>Wrongful Death </li></ul><ul><li>Patent Infringement </li></ul><ul><li>Wrongful loss of Property </li></ul>
  20. 20. Purposes of Business Valuation <ul><li>Gift and Estate </li></ul><ul><li>Estate/Retirement Planning – Transferring shares of a closely held business to children </li></ul><ul><li>What happens if owners of a closely held business die before transferring ownership? </li></ul><ul><li>Universal Standard of value for gifts and estate is </li></ul><ul><li>“ Fair Market Value” </li></ul><ul><li>Defined by Rev. Rul. 59-60 </li></ul>
  21. 21. <ul><li>Financial Reporting </li></ul><ul><li>FASB: 141R, 142 Value of Intangibles included in a business combination/Impairment </li></ul><ul><li>123R Valuation for Stock Options </li></ul><ul><li>Universal Standard of value for financial reporting is </li></ul><ul><li>“ Fair Value” </li></ul><ul><li>Defined by FASBS No. 157 </li></ul>Purposes of Business Valuation
  22. 22. <ul><li>Other Purposes of Business Valuation </li></ul><ul><li>Tax Planning </li></ul><ul><li>Employee Stock Option Plans (ESOPS) </li></ul><ul><li>Comprehensive Financial Analysis </li></ul>Purposes of Business Valuation
  23. 23. Valuation Concepts VALUATION VS. APPRAISAL
  24. 24. Valuation Concepts ADVOCATE VS. EXPERT
  25. 25. Valuation Concepts ART VS. SCIENCE
  26. 26. Value of a Business <ul><li>The value of an interest in a closely held business is typically considered to be equal to the future benefits that will be received from the business, discounted to the present at an appropriate discount rate. </li></ul>Concept Expected Benefit = Required Return = Present Value Expected Benefit Return
  27. 27. <ul><li>This simple definition of value raises several problems: </li></ul><ul><li>Whose definition of “benefits” applies? </li></ul><ul><li>Future projections are extremely difficult to make and get two opposing parties to agree. </li></ul><ul><li>What is the appropriate discount rate? </li></ul><ul><li>How long of a benefit stream should be included in the determination of value? </li></ul>Value of a Business
  28. 28. <ul><li>2 Things to Remember: </li></ul><ul><li>1.Almost everyone will have an opinion of value!! </li></ul><ul><li>2. The term “value” means different things to different people. </li></ul>Value of a Business
  29. 29. Polling Question <ul><li>Polling Question </li></ul><ul><li>How many others in your firm/company provide business valuation or litigation services? </li></ul><ul><ul><ul><li>A. 0 – 5 </li></ul></ul></ul><ul><ul><ul><li>B. 6 – 10 </li></ul></ul></ul><ul><ul><ul><li>C. 11 – 25 </li></ul></ul></ul><ul><ul><ul><li>D. 25 or more </li></ul></ul></ul>
  30. 30. Overview of the Valuation Process <ul><li>Step 1: Understanding the Engagement (Session 1) </li></ul><ul><li>Step 2: Financial/Economic/Industry Analysis </li></ul><ul><li>(Session 2) </li></ul><ul><li>Step 3: Valuation Approaches (Sessions 3 and 4) </li></ul><ul><li>Step 4: Discounts & Premiums (Session 5) </li></ul><ul><li>Step 5: Sanity Checks </li></ul><ul><li>Step 6: Value & Delivery </li></ul>
  31. 31. Overview of the Valuation Process Building the Valuation Pyramid Step 1: Covered Today (Lucky you!!) Determine Purpose & Client Standard of Value Interest to be Valued Value & Delivery Discounts & Premiums Valuation Approaches Financial, Economic & Industry Analysis Understanding the Engagement Sanity Checks Weightings Selecting Approaches Purchase Justification Rules of Thumb Minority/Control Mergerstat Big Tax Income Capitalization of Income/Cash Flow Discounted Cash Flow WACC Economic/Industry Global/National/Local Analysis Trade Publications Internet/Web Sites Valuation Date Premise of Value Type of Report Report Calculation of Value Summary Report Oral Report Other Approaches Subsequent Events Marketability Restricted Stock Studies Pre IPO Studies Asset Adjusted Net Assets Excess Earnings Market Completed Transactions Public Guideline Company Financial Site Visit Reliability of Information Normalizing Adjustments Benefit Stream Analyze Limiting Conditions Experience & Qualifications Legal & Regulatory Requirements Professional Standards
  32. 32. Overview of the Valuation Process STEP 2: Financial Economic & Industry Analysis Covered in Session 2: (Stick around, this group is just getting started ) Determine Purpose & Client Standard of Value Interest to be Valued Value & Delivery Discounts & Premiums Valuation Approaches Financial, Economic & Industry Analysis Understanding the Engagement Sanity Checks Weightings Selecting Approaches Purchase Justification Rules of Thumb Minority/Control Mergerstat Big Tax Income Capitalization of Income/Cash Flow Discounted Cash Flow WACC Economic/Industry Global/National/Local Analysis Trade Publications Internet/Web Sites Valuation Date Premise of Value Type of Report Report Calculation of Value Summary Report Oral Report Other Approaches Subsequent Events Marketability Restricted Stock Studies Pre IPO Studies Asset Adjusted Net Assets Excess Earnings Market Completed Transactions Public Guideline Company Financial Site Visit Reliability of Information Normalizing Adjustments Benefit Stream Analyze Limiting Conditions Experience & Qualifications Legal & Regulatory Requirements Professional Standards
  33. 33. Overview of the Valuation Process Step 3: Valuation Approaches This is the nuts and bolts – Sessions 3 & 4 Determine Purpose & Client Standard of Value Interest to be Valued Value & Delivery Discounts & Premiums Valuation Approaches Financial, Economic & Industry Analysis Understanding the Engagement Sanity Checks Weightings Selecting Approaches Purchase Justification Rules of Thumb Minority/Control Mergerstat Big Tax Income Capitalization of Income/Cash Flow Discounted Cash Flow WACC Economic/Industry Global/National/Local Analysis Trade Publications Internet/Web Sites Valuation Date Premise of Value Type of Report Report Calculation of Value Summary Report Oral Report Other Approaches Subsequent Events Marketability Restricted Stock Studies Pre IPO Studies Asset Adjusted Net Assets Excess Earnings Market Completed Transactions Public Guideline Company Financial Site Visit Reliability of Information Normalizing Adjustments Benefit Stream Analyze Limiting Conditions Experience & Qualifications Legal & Regulatory Requirements Professional Standards
  34. 34. Overview of the Valuation Process Step 4: Discounts and Premiums Session 5: Don’t be Scared of heights, see you then! Determine Purpose & Client Standard of Value Interest to be Valued Value & Delivery Discounts & Premiums Valuation Approaches Financial, Economic & Industry Analysis Understanding the Engagement Sanity Checks Weightings Selecting Approaches Purchase Justification Rules of Thumb Minority/Control Mergerstat Big Tax Income Capitalization of Income/Cash Flow Discounted Cash Flow WACC Economic/Industry Global/National/Local Analysis Trade Publications Internet/Web Sites Valuation Date Premise of Value Type of Report Report Calculation of Value Summary Report Oral Report Other Approaches Subsequent Events Marketability Restricted Stock Studies Pre IPO Studies Asset Adjusted Net Assets Excess Earnings Market Completed Transactions Public Guideline Company Financial Site Visit Reliability of Information Normalizing Adjustments Benefit Stream Analyze Limiting Conditions Experience & Qualifications Legal & Regulatory Requirements Professional Standards
  35. 35. Overview of the Valuation Process Step 5: Sanity Checks Making sure we have it together before we reach the top Determine Purpose & Client Standard of Value Interest to be Valued Value & Delivery Discounts & Premiums Valuation Approaches Financial, Economic & Industry Analysis Understanding the Engagement Sanity Checks Weightings Selecting Approaches Purchase Justification Rules of Thumb Minority/Control Mergerstat Big Tax Income Capitalization of Income/Cash Flow Discounted Cash Flow WACC Economic/Industry Global/National/Local Analysis Trade Publications Internet/Web Sites Valuation Date Premise of Value Type of Report Report Calculation of Value Summary Report Oral Report Other Approaches Subsequent Events Marketability Restricted Stock Studies Pre IPO Studies Asset Adjusted Net Assets Excess Earnings Market Completed Transactions Public Guideline Company Financial Site Visit Reliability of Information Normalizing Adjustments Benefit Stream Analyze Limiting Conditions Experience & Qualifications Legal & Regulatory Requirements Professional Standards
  36. 36. Overview of the Valuation Process Step 6: Now put it all together and ship it off !! Determine Purpose & Client Standard of Value Interest to be Valued Value & Delivery Discounts & Premiums Valuation Approaches Financial, Economic & Industry Analysis Understanding the Engagement Sanity Checks Weightings Selecting Approaches Purchase Justification Rules of Thumb Minority/Control Mergerstat Big Tax Income Capitalization of Income/Cash Flow Discounted Cash Flow WACC Economic/Industry Global/National/Local Analysis Trade Publications Internet/Web Sites Valuation Date Premise of Value Type of Report Report Calculation of Value Summary Report Oral Report Other Approaches Subsequent Events Marketability Restricted Stock Studies Pre IPO Studies Asset Adjusted Net Assets Excess Earnings Market Completed Transactions Public Guideline Company Financial Site Visit Reliability of Information Normalizing Adjustments Benefit Stream Analyze Limiting Conditions Experience & Qualifications Legal & Regulatory Requirements Professional Standards
  37. 37. Understanding the Engagement <ul><li>Ready for our 1 st Engagement? </li></ul><ul><li>Valuation is a PICNIC !!! </li></ul><ul><li>P Purpose of the Valuation </li></ul><ul><li>I Identify the Client </li></ul><ul><li>C Check for conflict of Interest </li></ul><ul><li>N Need to deliver final product </li></ul><ul><li>I Interest to be valued </li></ul><ul><li>C Confidence </li></ul>
  38. 38. Understanding the Engagement
  39. 39. Polling Question <ul><li>Polling Question </li></ul><ul><li>What is your favorite picnic food? </li></ul><ul><ul><ul><li>A. Hamburgers </li></ul></ul></ul><ul><ul><ul><li>B. Hot Dogs </li></ul></ul></ul><ul><ul><ul><li>C. Bratwurst </li></ul></ul></ul><ul><ul><ul><li>D. Fried Chicken </li></ul></ul></ul>
  40. 40. Client & Purpose ADVOCATE VS. EXPERT concept
  41. 41. Standard of Value <ul><li>We will introduce three “standards of value” </li></ul><ul><li>Fair Market Value </li></ul><ul><li>Fair Value </li></ul><ul><li>Strategic/Investment Value </li></ul>
  42. 42. Fair Market Value (FMV) <ul><li>The IRS has defined FMV in Revenue Ruling 59-60 as follows: </li></ul><ul><li>“ The price at which the property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy and the latter us not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts.” </li></ul>concept
  43. 43. Fair Market Value <ul><li>The “Break Down” </li></ul><ul><li>The Price – expressed in terms of cash equivalents </li></ul><ul><li>Property – Business, tangible & intangible property </li></ul><ul><li>Hypothetical buyer & hypothetical seller – creates a market place </li></ul><ul><li>Arms length transaction in an open and unrestricted market – no funny business </li></ul><ul><ul><li>No Compulsions </li></ul></ul><ul><ul><li>No forced sale </li></ul></ul><ul><li>Having reasonable knowledge – Understand industry, economics, and business. </li></ul>
  44. 44. Fair Value <ul><li>Fair Value can have several meanings depending on the purpose of the valuation </li></ul>
  45. 45. Fair Value <ul><li>Statutory Value </li></ul><ul><li>In most states, fair value, is the statutory standard of value applicable in cases of dissenting stockholders’ valuation rights. </li></ul>
  46. 46. Fair Value <ul><li>In the states that have adopted the Uniform Business Corporation Act, the definition of fair value is: </li></ul><ul><li>“ Fair value,” with respect to a dissenter’s shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. </li></ul>
  47. 47. Fair Value <ul><li>Fair value is also the standard of value used by the Financial Accounting Standards Board (FASB) in its pronouncements pertaining to business valuation. </li></ul><ul><li>There are two different definitions for standards of value under FASB: </li></ul>
  48. 48. Fair Value – for Financial Reporting <ul><li>SFAS No. 157 </li></ul><ul><ul><li>Fair Value: the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date </li></ul></ul><ul><ul><li>Sell or Paid = considered an exit price in the most advantageous market </li></ul></ul><ul><ul><li>Market Participants: Independent; Knowledgeable, Willing and Able </li></ul></ul>
  49. 49. <ul><li>We all know 157 = 123 and FASB agrees: </li></ul><ul><li>SFAS No. 157 says it does not apply to accounting for employee stock options and other share bases payments (SFAS No 123R) </li></ul>Fair Value – for Financial Reporting
  50. 50. Fair value is defined in FASB Statement 123R, as: “ the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than a forced liquidation sale.” Fair Value – for Financial Reporting
  51. 51. Fair Value – Marital <ul><li>Fair value may also relate to a value in divorce. </li></ul><ul><li>Many states have specific definitions of fair value with regard to marital dissolution. </li></ul><ul><li>Make sure you understand the case law for your state. </li></ul>
  52. 52. Strategic / Investment Value <ul><li>The value to a particular investor based on individual investment requirements and expectations. </li></ul><ul><li>“Value to the Holder” </li></ul>
  53. 53. Standards of Value <ul><li>Valuation take away: </li></ul><ul><li>Based on the standards of value’s previously discussed there are numerous opportunities in valuation. </li></ul>Other Valuation Opportunities: M&A, Strategic Planning, ESOP’s Concept Fair Market Value / Fair Value Divorce Fair Value Stock Options Fair Value Intangible Assets in Business Combinations Fair Market Value Gift and Estate
  54. 54. Polling Question <ul><li>Polling Question </li></ul><ul><li>What percentage of your firm/company’s business is derived from BV services (including litigation support related to the BV services?) </li></ul><ul><ul><ul><li>A. 0 – 10% </li></ul></ul></ul><ul><ul><ul><li>B. 11 – 24% </li></ul></ul></ul><ul><ul><ul><li>C. 25 – 50% </li></ul></ul></ul><ul><ul><ul><li>D. 51 – 74% </li></ul></ul></ul><ul><ul><ul><li>E. 75% or more </li></ul></ul></ul>
  55. 55. Premise of Value <ul><li>After a standard of value has been determined, the valuator must determine the appropriate premise of value. </li></ul>
  56. 56. Premise of Value <ul><li>Book Value </li></ul><ul><li>Going Concern Value </li></ul><ul><li>Liquidation Value </li></ul>
  57. 57. Premise of Value – Book Value <ul><li>The difference between total assets and total liabilities as they appear on the balance sheet. Also known as Shareholder’s Equity. </li></ul><ul><li>Adjusted book value – would adjust assets & liabilities recorded at cost to their current market values. </li></ul>
  58. 58. Premise of Value – Going Concern <ul><li>The value of a business enterprise that is expected to continue to operate into the future. </li></ul><ul><li>The intangible elements of Going Concern Value result from factors such as having a trained work force, customer list, and systems and procedures in place. </li></ul>
  59. 59. Premise of Value – Liquidation Value <ul><li>The net amount that would be realized if the business is terminated and the assets are sold piecemeal </li></ul><ul><li>A liquidation can be: </li></ul><ul><li>Orderly or </li></ul><ul><li>Forced </li></ul>
  60. 60. Limiting Conditions <ul><li>Designed to Protect the Valuation Analyst </li></ul><ul><li>Examples include: </li></ul><ul><li>1. We have relied up financial information & representations provided by management </li></ul><ul><li>2. Provision for subsequent event: </li></ul><ul><li>This valuation reflects facts and conditions existing at the date of this valuation. Subsequent events have not been considered, and we have no obligation to update our report for such events and conditions. </li></ul><ul><li>3. No financial interest in client </li></ul><ul><li>See SSVS #1 for listing of recommended disclosures </li></ul>
  61. 61. Polling Question <ul><li>Polling Question </li></ul><ul><li>Have you taken any business valuation related training prior to this webinar series? </li></ul><ul><ul><ul><li>A. Yes </li></ul></ul></ul><ul><ul><ul><li>B. No </li></ul></ul></ul>
  62. 62. Qualifications & Experience <ul><li>Follow Professional Standards </li></ul><ul><li>Be aware of legal & regulatory requirements </li></ul><ul><li>Have confidence </li></ul><ul><li>Don’t be afraid to use a mentor </li></ul>
  63. 63. Questions to ask Yourself <ul><li>Am I qualified? </li></ul><ul><li>Do I have any conflicts of interest? </li></ul><ul><li>Do I understand the purpose and users of the valuation report? </li></ul><ul><li>Do I understand the industry? </li></ul><ul><li>Am I familiar with professional standards? </li></ul><ul><li>Did I identify limiting conditions and/or scope restrictions? </li></ul>
  64. 64. <ul><li>Recommended Resources for Your Library </li></ul><ul><li>available through NACVA at Discounted Prices… </li></ul><ul><li>PPC’s Guide to Business Valuation </li></ul><ul><li>Valuation: Measuring and Managing the Value of Companies </li></ul><ul><li>Valuing a Business: The Analysis & Appraisal of Closely Held Companies </li></ul><ul><li>Valuing Small Businesses & Professional Practices </li></ul><ul><li>How to Value Over 100 Closely Held Businesses </li></ul><ul><li>Business Valuation and Taxes—Procedure Law & Prospective </li></ul><ul><li>The Market Approach to Valuing Businesses </li></ul>
  65. 65. Conclusion to Part 1 Q U E S T I O N S ?
  66. 66. Please complete your Webinar Evaluation Form and CPE Attestation Form. Fax both forms to NACVA at (866) 548-2315. Keep a copy of the CPE Attestation Form for your records.

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