Michael B. Lehner, CPA/ABV, CFE, ASA
June 18, 2016
5 steps to valuing a business

5 steps to valuing a business

Valuators use a variety of analytical techniques and possess different qualifications. But a common denominator is the process that everyone uses to value a business. This article describes the five steps a valuator undergoes: 1) agreeing on engagement parameters, 2) requesting documents, 3) undertaking fieldwork, 4) preparing the report, and 5) providing expert testimony.
June 10, 2016

Revenue Ruling 59-60:Tried-and-true guidance for valuing private business interests

Revenue Ruling 59-60 of the Internal Revenue Code has been around for nearly 60 years. The IRS originally created this landmark publication for gift and estate tax purposes. Today, it’s often referenced in valuations prepared for other reasons, including divorce cases and shareholder disputes. This article highlights its definition of fair market value and lists various factors to consider when valuing a closely held business interest. A sidebar discusses what this guidance says about the use of weights and averages in business valuation.
March 20, 2016
hidden assets business value

The shadowy world of hidden assets

Whether intentionally or not, the “lower value” side of divorce, shareholder or other conflicts may obscure or ignore certain assets to bolster its case. To establish a fully rounded value estimate, financial experts have to look harder. They must enter the shadowy world of hidden assets. This article explains the kinds of financial data experts look for and how they detect hidden assets.
February 17, 2016
rebuttal business valuation reports.

Save time and money with rebuttal business valuation reports

A defense attorney will often wait until the plaintiff’s attorney submits a valuation report. Then, the defense hires its own expert to prepare a “rebuttal report,” rather than pay for a separate full-blown valuation report. This strategy can be a cost-effective way to poke holes in the opposing expert’s analyses, but rebuttals are only effective when they’re detailed and accurate. This article explains reasons clients opt for rebuttal reports, the preferred reporting format and the level of detail courts have come to expect from rebuttal experts.
October 30, 2015
visual aids business valuation experts

Visual aids A picture can be worth 1,000 words

Business appraisers who serve as expert witnesses in court face two daunting tasks: They must capture the attention of a judge or jury and make complex financial analyses easy to understand. This article provides tips on how to use impactful visual aids to break up the monotony and drive home key points in an expert’s oral testimony and written reports.
May 20, 2015
business valuation

An additional opinion can help resolve business valuation disputes

Even two unbiased, equally qualified valuation professionals applying sound appraisal practices are unlikely to arrive at exactly the same number. In fact, valuation differences of 10% or more are common — even under ideal circumstances. In litigation, when neither valuator will concede an objective third expert can help settle the dispute. This article discusses third expert selection and uses a hypothetical case to illustrate the important role a third expert can play.
May 20, 2015
business valuation experts accounting

Why business valuation experts need accounting know-how

Accounting and appraisal are interrelated disciplines. After all, financial statements are the foundation for valuing a business. So it’s imperative that business valuation experts understand accounting terminology and how to adjust for material differences in accounting methods.
May 20, 2015
business valuation

In business valuation, “normal” matters

Typically, the starting point for measuring a company’s earning power is its financial statements and other documents that reflect historic financial performance. But often, these documents contain entries that can distort a company’s true earning potential. For this reason, valuation experts often adjust a company’s financial statements to provide a picture of its financial performance under “normal” conditions. This article looks at three common areas of adjustment and explains the circumstances under which a normalization adjustment is appropriate.
May 18, 2015
valuation date

Why the valuation date is so critical

Business valuation experts are prepared for a number of reasons: estate planning, divorce settlements and shareholder litigation, just to name a few. And while the parties in these various matters may focus solely on the valuation amount, a valuation expert will also be focusing on the valuation date. This article explains why, under certain circumstances, an executor may elect to use an “alternate valuation date” rather than one that’s customarily used.
April 16, 2015
Divorce taxes

Factoring taxes into divorce settlements

How assets are split up in a divorce can have significant tax consequences, especially when the marital estate includes a private business interest. Valuation is just part of the picture. Equitable distributions require the parties to premeditate tax issues, too. This article lists common marital assets allocated in divorce settlement agreements. It also discusses how taxes affect asset value and explains how corporate redemptions are taxed. A sidebar looks at real estate and other investments that may create taxable gains when they’re sold.