Is the price right?
Cover all the bases with a fairness opinion
When a company is about to embark on a major transaction — such as a merger or acquisition — having an objective outsider review the numbers to ensure management has covered all the bases is key. Fairness opinions state whether the price offered in a transaction falls within a range of fairness from a financial point of view. This article discusses the benefits of fairness opinions and notes the situations in which they may be useful. It points out that, in many ways, the processes underlying fairness opinions are similar to those used in traditional business valuations.
Smith v. Van Gorkom (488 A.22d. 858, Del. 1985).

Analyze this: An overview of financial statement analysis
Financial statement analysis is an important part of every valuation assignment. By benchmarking a company against its competitors and itself over time, the valuator gauges risk and estimates expected return. This article describes four basic components of a company’s financial performance that valuators take into account when making their analysis, including profits and liquidity.

Whodunit — and how much is at stake?
When a company is the victim of a civil wrongdoing such as breach of contract, profits frequently suffer. Courts may award monetary damages to make the injured party “whole” again. Estimating damages starts with a basic theoretical position: If not for Mr. Smith’s breach of contract, ABC Co. would have sold more units. This article explains some of the variables that factor into an expert’s damage calculation and cites a recent case, Chavez Properties, to illustrate the importance of an adequate and well-founded analysis.
Chavez Properties-Airport Parking Albuquerque, L.P. v. Lorentzen, U.S. Court of Appeals Tenth Circuit, Nos. 04-2338 and 04-2339, November 7, 2006.

4 key IRS rulings at a glance
This brief article lists four noteworthy valuation-related revenue rulings and describes their impact on valuations, whether prepared for tax or nontax purposes. The article notes that it’s important to understand these rulings before relying on a business valuation for any purpose.