Business Valuation Review Volume 36: Issue 2

Hello, Everyone,

Recently, I've been analyzing restricted stock data with some colleagues at California State University Northridge, Professors Monica Hussein and James Dow, to better understand how various factors relate to discounts. The primary analytical methodology is a multiple regression, where we regressed restricted stock discounts on a variety of variables to find out what factors are statistically significantly related to the discounts. For comparison purposes, we also performed univariate regressions of discounts on one variable.

Some results may interest you. We found that registration rights in the univariate regression were statistically significantly related to observed discounts, but in the

The International Glossary of Business Valuation Terms, June 2001, developed jointly by the American Institute of Certified Public Accountants, American Society of Appraisers, Canadian Institute of Chartered Business Valuators, National Association of Certified Valuation Analysts, and Institute of Business Appraisers, defines fair market value as “The price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arms-length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.” The discussion in this technical paper focuses on areas the valuation analyst must consider when characterizing the willing buyer and willing seller for a determination fair market value.

The field of business and intangible asset valuations has many of the elements of a profession. In recent years, comments by the SEC expressed concern about the structure of the business valuation profession and the lack of sufficient quality assurance procedures. As a result of these concerns, the Mandatory Performance Framework ("MPF") and Application of the Mandatory Performance Framework ("AMPF") documents were released in January 2017 to provide guidance including minimum performance standards and documentation requirements for certain financial reporting valuation projects. In mid-2017, the Certified in Entity and Intangible Valuations designation was made available to qualified business appraisers. This article provides an overview of various efforts to advance valuation quality over the years. An overview of the MPF and AMPF is provided as is a discussion of the CEIV designation and related requirements.

This article continues the discussion of statutory appraisal that was presented in Part I in the prior issue of Business Valuation Review. Fair value, the predominant standard of value employed by state courts to value dissenters' shares in appraisal cases is, is determined by state law. In most states, fair value is the shareholder's pro rata portion of the value of a company's equity. This article discusses the approaches used by the Delaware courts' views to assess fair value. Premiums and discounts are usually not permitted in statutory appraisals in Delaware and most other states, and we discuss the reasoning and the exceptions.

Editor's Column

American Society of Appraisers Business Valuation Committee Special Topics Paper #4 The “Willing Buyer” and the “Willing Seller” in Fair Market Value a

Certified in Entity and Intangible Valuations (CEIV): Advancing the Quality of Valuations

Statutory Fair Value in Dissenting Shareholder Cases: Part II

Back-solving Unobservable Trademark Royalty Rates—The Case of ITT vs Xylem Group

From the Chair

Welcome to Our Newest BVC Members

Volume 36, No. 2 — Complete Issue

From the Editor

Customer Concentration: Good, Bad, or Ugly?

From the Chair

Delaware Valuation Decisions, 2021 to 2024

Volume 44, No. 1 — Complete Issue