Survival Tips for BV Experts Put on the Witness Stand

I remember my first case. All of a sudden, all the fluids from my mouth went away. Since then, when I do occasional cases, I make sure there is water nearby because when, your mouth gets dry like that, you appear extremely nervous. That’s my recollection of the first time I was asked to be an expert witness.

Personal Injury Cases: Opportunity for Appraisers?

Among the most interesting types of engagements for valuation experts are personal injury cases—but not because the math is all that challenging (it isn’t). Rather, these cases test your ability to gather the right data and tell an easily understood story in a written report and on the witness stand. Of course, as with any new area of practice, you need to educate yourself in that area…

A Fresh Look at Using the Income Approach to Valuing FLPs

When I value minority interests in a family limited partnership (FLP), I will do an income approach, but I will not enjoy it. All too frequently, the FLP does not generate regular distributions or regular profits. Plus, I’ll have to guess when the FLP is going to be liquidated: five years, 10 years, or perhaps never. By the way, what will the property be worth in five years—or 10 years?

Can Regional Data Be Used to Determine Reasonable Compensation Anywhere?

If you’re valuing small private companies, then you know that one of the biggest adjustments to be made is for reasonable compensation. But getting good, supportable data is often a challenge—and expensive. Therefore, consider a regional survey, which could give you the data you need at an affordable price.

In their book, Reasonable Compensation: Application and Analysis for Appraisal,…

Valuation Reports: Charging by the Page

A few weeks ago, a gentleman called me out of the blue and said he wanted me to value four family limited partnerships that had been part of his father’s estate. He had received a quote of $20,000 from his father’s lawyer and wanted to know if I could do the work for less money. He began to complain that the estate had already paid about $20,000 to value the underlying real estate in the FLPs, each of which contained apartment complexes in the same city with the same management.

After studying the documents, I came up with a lower fee and had him sign the engagement letter. A week later, he called me very apologetically to say that his attorney, a partner with a 1,000 lawyer international firm, insisted on using a valuation firm that he had used for many other engagements and that he felt would be better to have in their corner in case of an audit.

What to Consider When Carving Out the Value of a Firm’s Website

Recently, I was asked to value a retail company doing business solely over the Internet. The company’s finances were weak, but the owner insisted that the website itself had intangible value that I was ignoring. He may have been right, but I passed on the engagement.

Do websites have intrinsic value separate from the businesses they front? After all, go online and you’ll see page after…

When Precedent Doesn’t Help: Valuing Preferred Stock Outside the Box

As appraisers, we always look for concrete examples and hard figures. We like to value things based on precedent and use methods that have proved their worth before. But what do you do when the hard facts don’t cooperate? I was recently asked to value shares of preferred stock that I knew involved substantial risk—but risk that I couldn’t quantify. I looked at textbooks and cases and…

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