Business Valuation Review Volume 42: Issue 1

I hope this issue finds you all well.

First, a few updates.

The American Society of Appraisers has posted on its website updates to Valuing a Business, 6th edition, the current edition of Shannon Pratt's original primer on business valuation and one of the world's most respected valuation references. The updates posted include the following:

Chapter 9: Relationship between Accounting Statements and Their Use in the Income Approach and
Chapter 11: Estimating the Discount Rate for Smaller Closely Held Businesses, which replaces “Critique of Implied Company Pricing Line.”

The ASA announced it will be providing periodic updates to

The valuation industry has utilized the concepts of control premiums and corresponding discounts for lack of control (DLOC) for decades. There has been considerable debate regarding the application of control premiums paid to acquire public companies, given the likely existence of synergies embedded within those premiums. This article analyzes implied control premiums using Delaware Court of Chancery (the “Court”) decisions in which the Court determined the fair value of the shares of formerly public companies. While this article is not intended to endorse the use of adjusted acquisition premiums when calculating a control premium or DLOC, it provides empirical support for the concept that acquisition premiums likely include synergistic elements and that an appraiser should consider downward adjustments for this issue.

This article provides the business appraiser with a better understanding of how real estate appraisers think about property rights and the distinctions they make between fee simple and leased fee estates. It also discusses two areas where a property rights issue could lead to understating intangible assets in real estate centric entities. Two brief case studies are used to demonstrate where problems can arise and how to resolve them. This is a primer to foster more in-depth discussion in future papers from the appraisal community.

From the Editor

Implied Control Premiums through Delaware Appraisal Decisions

Property Rights and the Real Estate Appraiser

Business Valuation Cases in Brief

Estate of Connie Collins v. Tabs Motors of Valley Stream Corp., 2021 NY Slip Op 32438(U)

From the Chair

Volume 42, No. 1 — 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