Critical Business Valuation Issues for Practitioners

Co-sponsored with Massachusetts Chapter of the American Academy of Matrimonial Lawyers

Date: Thursday, May 12, 2005

Location: Suffolk University Law School, 120 Tremont St., Boston, MA
Time: 04:00 PM - 07:30 PM

An attorney who engages a valuation expert either on a regular basis or only occasionally needs to be aware of the process, problems and issues which arise in almost every engagement. It is the intention of the five attorneys experienced in this discipline and ten valuation experts to share their knowledge, thoughts and ideas. The information obtained from the sessions will benefit attorneys who practice in the areas of family law, estate planning and commercial law, as well as judges.

The format used in this program will permit the opportunity for both the faculty and attendees to participate in discussing the issues raised and their resolution. The program has been divided into four sessions, each with its own special issues but, at the same time, all related. Each member of the program faculty has chosen a topic, which on the basis of their experience, they judge to be most useful for discussion, and which reflects their particular expertise. Each session will have one or more attorneys on the panel who will assist with the interaction of the valuation experts and the attendees.

The sessions will cover the valuation process, an analysis of the issues and problems created by different accounting methods and business entities, the different types of value and what the courts’ positions are, and what you can do when experts for each party differ substantially in their valuation opinion.

This program has been designed for attorneys with family law, estate planning and commercial law experience.

• Financial statements-accrual, cash, and other comprehensive basis of accounting when each is used and why
• Valuation approaches-market, income and cost when each is used and why
• Cash v. accrual accounting
• Normalization of financial statements
• Non-cash compensation-perks, stock, etc.
• Site visits
• Income v. cash flow
• Purpose of valuation-commercial, marital, estate, family limited partnerships Should different approaches or standards of value be used?
• Capitalization and discount rates
• Discounts and premiums
• What attorneys should be looking for when engaging an expert

Gail Kleven Gelb, Esq., Gelb & Gelb LLP, Boston, MA

Walter S. Goldstein, CPA. JD, Edelstein & Company LLP, Boston, MA

Joel R. Horvitz, CPA, Georgetown, MA

• Market Approach Methodologies:
  Comparison to Public Companies
  Adjustments for Risk and Growth
  Comparison to Merger and Acquisition Transactions
  Nature and Sources of Data
  Industry Benchmarks and Sanity Tests

• Levels of Value and the World of Premiums and Discounts
  The Meaning and Implications of the Levels of Value Paradigm
  Control Premiums
  Discount for Lack of Control for Minority Interests
  Discount for Lack of Marketability for Minority Interests
  Restricted Stock and IPO Studies
  Application of Comparable Transaction Information
  Key Person Discounts
  Personal versus Business Goodwill

• Entity Differences and Special Applications
  S Corporations Compared to C Corporations and Tax Affecting
  Partnership Interests
  Limited Partnerships
  Trusts
  Professional Practices
  Service Companies
  Undivided Interests in Real Estate
  Valuation of Intangibles: Similarities and Differences
  “Cash Cash” Companies and Forensic Accounting

Peri Ann Aptaker, Esq., CPA/PFS, CFP, CBA
Principal & Director of Tax Services
Kahn, Litwin, Renza & Co. Ltd., Providence, RI

Marc D. Bello, CPA, MST
Edelstein & Company LLP
Certified Public Acocuntants & Consultants, Boston, MA

Mark Leicester, CPA, ABV, JD, LLM, CFE
Director of Business Valuaton and Litgiation Services
RSM McGladrey, Inc.
McGladrey & Pullen LLP, Burlington, MA

Paul P. Perocchi, Esq.
Brown Rudnick Berlack Israels LLP, Boston, MA

• Stand alone
• Special buyers
• Reasons for valuation
• Commercial damages-breach of contract
• Marital-property settlements
• Subsequent events
• Buy sell agreements
• What valuation date should be used and what issues are raised by different dates

Mark O. Dietrich, CPA, ABV
Dietrich &Wilson PC, Framingham, MA

Norman I. Jacobs, Esq.
Esdaile Barrett & Esdaile, Boston, MA

Laurie Tunick, CPA, ABV
Tunick Financial Services, Danvers, MA

• Independent expert v. hired gun

• Adjustments of financials to arrive at economic numbers
  Compensation
  Perks
  Timing items
  Capitalization v. expense
  Pension obligations
  Bad debt allowances

• Lawsuits
• Wrong cost of capital assumptions
• Capitalization rates
• Key person
• Marketability discount rates
• Tax rates

• Non-financial items
  Industry
  Location
  Management
  Products or services
  Customers
  Competition
  Suppliers

• Should experts meet and discuss differences

Amy Lynn Blake, Esq.
Casner & Edwards, LLP, Boston, MA

Steve J. Bravo, ASA, CPA/ABV/PFS CBA CFP MST
Apogee Business Valuations, Inc., Framingham, MA

Raymond Faulkner, CPA
Boston, MA

Chris M. Mellen, ASA, MCBA, CM & A, MBA
President Delphi Valuations Advisors, Inc., Sharon, MA