What you see may not be what you get
Making complex valuation adjustments
The process of valuation often requires adjustments to ensure the final numbers make sense for a particular company. Adjustments can affect how a valuator applies the cost, market and income approaches. So, it’s imperative to consider their impacts throughout the valuation process. This article explains the different categories of adjustments, using examples to illustrate their effects on value. It notes that, because discrepancies between two expert opinions can occur, expertise is key in applying the appropriate valuation adjustments.

Can public stocks be used to value private firms?
Public and private businesses often differ significantly in terms of access to capital, product breadth and market reach. Still, many valuation professionals, along with the IRS and some courts, believe that the guideline public company method can work — under the right circumstances. But it takes an experienced valuator to know when and how to apply this method. This article explains the benefits and pitfalls of using the method and how to determine when it is appropriate.

Buy-sell agreements in divorce
Having good advice is key
Dissolving a marital estate that includes a private business interest can be fraught with complications. One of the first steps is to disclose and reconcile all relevant valuation evidence, including buy-sell agreements. The buy-sell provisions of partnership or shareholder agreements are intended to protect ownership interests. But they may come back to haunt owners or their spouses later in divorce. This article discusses a recent case that illustrates the importance of both spouses having expert valuation advice to help navigate the ins and outs of these agreements in a marital dissolution case.

Give your appraisal a dose of reality
Before valuators finalize their conclusions, they step back and ask, “Would this number make sense in the real world?” Experts typically rely on their professional experience to answer this question. But they may also turn to various sanity checks. This brief article lists some sanity checks valuators may turn to, including industry rules of thumb, the justification of purchase (JOP) test and other sources of supplemental data.