Conference Sessions: Business Valuation
Thursday, December 14, 2023
Calculating or Determining Company Growth
Thursday, December 14, 2023 9:20–11:00 a.m. ET
Program Description
TBD
How You Will Benefit
After completing this session/course, attendees will be able to:
- TBD
Presenter(s)
Ashok Abbott
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Recent Developments Impacting the Valuation of S Corporations
Thursday, December 14, 2023 11:20 a.m.–1:00 p.m. ET
Program Description
Our presentation will address the disparate valuation treatment of S corps in various courtroom venues. Our review will include the Jones, Michael Jackson, Ryan, and Cecil court cases. We will also demonstrate how state S corp income tax rates affect the use of the Van Vleet Model. In addition, we will discuss the sunset provisions of the 2018 TCJA and how these provisions will affect the value of S corps during the next three years.
How You Will Benefit
After completing this session/course, attendees will be able to:
- Recognize and understand recent court case developments regarding the valuation of S corps
- Determine and address the valuation impact of various entity-level state tax rates on S corps
- Identify and understand the sunset provision of the TCJA and be able to address its impact on the valuation of S corps.
Presenter(s)
William McInerney, Dan Van Vleet
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Discount for Lack of Marketability: Margrabe Options Approach
Thursday, December 14, 2023 1:50–2:40 p.m. ET
Program Description
This session will:
- Solidify the participants’ understanding of the assumptions underlying the options-based models for estimating DLOM
- Introduce the applicable information asymmetry extensions of the models and their applications.
- Demonstrate a theoretically valid and empirically tested calculator for estimating DLOM, and
- Introduce the participants to public markets data used to estimate DLOM.
How You Will Benefit
After completing this session/course, attendees will be able to:
- Distinguish between information asymmetries prevailing under three different types of transactions
- Identify appropriate option-based DLOM model for each of the transactions
- Calculate an applicable DLOM discount for each type of transaction
Presenter(s)
Ashok Abbott, Frank Wisehart
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Current Economic and Financial Market Conditions and How They are Affecting Cost of Capital
Thursday, December 14, 2023 3:00–4:40 p.m. ET
Program Description
After reaching a 41-year record high in June 2022, U.S. inflation has begun its downward descent. Nevertheless, core inflation (i.e., excluding the volatile energy and food prices) remains stubbornly high. The Federal Reserve (Fed) embarked on one of its most aggressive rate hiking cycles in history. Equity markets have recovered most of their losses in 2023, but there is still uncertainty on whether the Fed will achieve a soft landing for the U.S. economy, as it continues to raise interest rates (or keep them at a higher level). This means that companies are now facing a higher cost of capital that matches the levels last seen during the 2008-2009 Global Financial Crisis. Our session will unpack the latest economic and financial market developments that have an impact on valuations and cost of capital estimates.
How You Will Benefit
After completing this session/course, attendees will be able to:
- Identify the current U.S. economic and financial market conditions that may impact on cost of capital estimates
- Assess the effect of a higher inflationary environment on U.S. real GDP growth projections and repercussions on a company's projected revenue growth and long-term growth
- Discuss how the Federal Reserve's policy of “higher for longer” are changing the expectations for future discount rates
- Evaluate on the impact of higher interest rates on cost of debt and cost of debt estimates
Presenter(s)
Jim Harrington, Carla Nunes
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Friday, December 15, 2023
Developing the Discount Rate for Lost Profits Claims
Friday, December 15, 2023 9:20–11:00 a.m. ET
Program Description
Measuring a lost profits claim can be challenging. It requires in-depth understanding of the lost cash flow and the appropriate discount rate. In this session attendees will gain a better understanding of how to develop a discount rate appropriate for the risk of the claimed loss.
How You Will Benefit
After completing this session/course, attendees will be able to:
- Recognize the difference between a discount rate for a business and one appropriate for a lost profits claim
- Create a conceptual and practical understanding of developing a discount rate
- Illustrate how to better measure discount rate inputs
- Determine the nuances of data sets available for developing discount rates and how to match to the risk of the lost profits
- Express an understanding of the differences between ex ante and ex post discount rates
- Express an understanding of how to develop a discount rate appropriate for the lost profits claim
- Identify common errors made in developing discount rates
Presenter(s)
Roger Grabowski
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Reducing Bias in Business Valuation Engagements
Friday, December 15, 2023 11:20 a.m.–1:00 p.m. ET
Program Description
Valuation experts bring an inherent bias to every engagement though its ostensibly removed when the “basis and reasons” for their opinions are expressed. This session will provide practitioners with the tools they need to confidently support their opinions when challenged. Attendees will benefit from the latest studies on bias and the lessons learned from a recent Delaware Chancery case. The presenters will also survey the professional standards, review changes to the FRE, and discuss how to apply the concept of reasonable certainty to business valuation engagements to reduce bias.
How You Will Benefit
After completing this session/course, attendees will be able to:
- Recognize the professional standards governing business valuation engagements
- Summarize latest studies on anchoring and engagement bias
- Identify the USPAP changes focusing on bias
- Evaluate and understand how expert bias affected the Delaware Chancery case: In Re Cellular Tel. P’ship Litig., 2022 Del. Ch. LEXIS 561
- Integrate the proposed amendments to the Federal Rules of Evidence into their practice
- Apply the reasonable certainty concept to business valuations
Presenter(s)
Zach Meyers, Jason Pierce
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The Riskiness of the Risk-Free Rate: Adjusting for the Risk Elements
Friday, December 15, 2023 1:50–2:40 p.m. ET
Program Description
The idea of a risk-free rate cannot have a universal application in its current form and wholehearted adoption of risk-free rates on government treasury bills and bonds across countries is not consistent with reality. This session will offer suggestions to standardize adjustments to address the risks associated with treasury bills, and bonds issued by individual governments, especially in frontier and emerging economies. This will improve the robustness of business valuation analytical work and ensure that practitioners adequately reflect the riskiness of government treasury bills and bonds in the computation of the discount and capitalization rates to that business valuation conclusions.
How You Will Benefit
After completing this session/course, attendees will be able to:
- Recognize that the "risk-free" rate is currently not without risk elements as is currently applied universally
- Assess the riskiness of the "risk-free" rate and make the necessary adjustments based on the circumstances of a country and the Government which issued the treasury bill or bond
Presenter(s)
Bennet Kpenty
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Valuation Under Interest Rate Volatility
Friday, December 15, 2023 3:00–4:40 p.m. ET
Program Description
Interest rate volatility and uncertainty affect several aspects of business valuation, especially profit & cash flow projections, cost of capital, present value analysis, and tax planning. This presentation will review Monte Carlo techniques to model those parameters. We will also discuss various approaches to historical time frames for determining inputs such as risk free rates, beta, and ROIC.
How You Will Benefit
After completing this session/course, attendees will be able to:
- Interest rate volatility and uncertainty affect several aspects of business valuation, especially profit & cash flow projections, cost of capital, present value analysis, and tax planning. This presentation will review Monte Carlo techniques to model those parameters. We will also discuss various approaches to historical time frames for determining inputs such as risk free rates, beta, and ROIC.
Presenter(s)
Alan Gorlick
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For NASBA sponsorship information, including refund, complaint, and/or program cancelation policies, click here.
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