Conference Presentations, Webinars, and Professional Journal Articles

Our analysts frequently deliver conference speeches and author journal articles on topics related to business and intangible asset valuation, forensic analysis, and financial advisory services. The presentations are delivered at seminars and conferences of national and local bar associations, national and state CPA societies, estate planning associations, taxation institutes, and valuation associations, to name a few. The presentation materials from some of these conference speeches are available here.

Our analysts frequently publish in accounting, finance, and legal professional journals. And, our analysts frequently author technical issue white papers for professional organizations. Recent journal articles and white papers authored by Willamette Management Associates analysts are also available here.

Below we list articles authored by our analysts that have recently appeared in publications that are not readily available online.

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 “Subjective Determination and Objective Determination for Claiming a Worthless Security Loss Deduction”

Robert F. Reilly, a managing director of our firm, published in the November 2022, issue of ALI CLE’s Practical Tax Lawyer, www.ali-cle.org. Reproduced with permission.

Tax counsel often advise taxpayers to apply Internal Revenue Code section 165(a) to claim an income tax deduction for an uncompensated loss sustained during the tax year. The tax character of the uncompensated loss can be an ordinary income deduction or a capital loss, depending on the facts and circumstances. Robert’s article illustrates that the section 165(a) worthless stock deduction is not limited to the stock of a corporation, but is also available for a partnership interest, LLC interest, or similar equity interests. Robert describes the criteria that tax counsel and the IRS consider to determine the worthlessness of a security.


 “Income Tax Consequences Related to Commercial Damages Awards”

Robert F. Reilly, a managing director of our firm, published in the November 2022, issue of ALI CLE’s Practical Tax Lawyer, www.ali-cle.org. Reproduced with permission.

Robert’s article focuses entirely on commercial damages measurement issues—not on causation or liability issues. In particular, his article focuses on one technical, but important, issue related to the measurement of the amount of commercial damages: the income tax considerations related to the damages measurement. These income tax considerations relate to: (1) the income recognition and the taxation of any compensation-related payments received by the damaged party; (2) the tax deduction and the taxation of any compensation-related payments made by the damaging party; and (3) the measurement of the amount of the judicial award (or the negotiated settlement) required to make the damaged party whole—after any adjustments necessary with regard to the related income tax considerations. In addition, Robert’s article discusses what the tax counsel—and the damaged/damaging company, the company owners, litigation counsel for these parties, and each party’s damages analyst—need to know about the income tax considerations related to damages measurements and damages awards (or negotiated settlements).


 “Best Practice for Avoiding Common Errors in Fair Value Measurements”

Robert F. Reilly, a managing director of our firm, delivered this presentation at the Annual Conference of the Minnesota Chapter of the National Association of Certified Valuators and Analysts. The conference was held on September 21, 2022.

Robert’s presentation begins with an overview of fair value measurement issues. He then discusses the top 10 fair value measurement errors and omissions and best practices for avoiding these errors. Robert goes on to explore best practices for other fair value measurement issues and general appraiser caveats and best practices.


 “Best Practices for Economic Obsolescence Measurement and Reporting”

Robert F. Reilly, a managing director of our firm, delivered this presentation at the National Association of Property Tax Representatives—Transportation, Energy, and Communications (NAPTR-TEC) 2022 Conference, which was held on October 25, 2022, in Kansas City, Missouri.

Robert’s presentation begins by introducing unit principle property appraisal concepts and economic obsolescence concepts. He then explores the principles of economic obsolescence measurement. Robert discusses generally accepted economic obsolescence measurement methods. He presents 10 (or so) objections to economic obsolescence measurements. Finally, he reviews assessment authority considerations regarding obsolescence adjustments. This version of Robert’s presentation is expanded from the handout given at the conference.


 “Taxation Considerations Related to Equity Incentive Compensation Plans”

By Robert Reilly, a managing director of our firm, published in the September 2022, issue of Practical Tax Lawyer. Reproduced with permission.

With labor shortages currently affecting many industries and with the low national unemployment rate, many private company owners are considering compensation incentives to attract and retain high quality employees. Some compensation incentives include equity-based compensation of various types. Robert’s article summarizes what tax counsel need to know about the taxation issues and the securities valuation issues related to private company equity incentive compensation programs.


 “Noncompete Agreement Tax Considerations in Corporate Acquisitions”

By Robert Reilly, a managing director of our firm, published in the September 2022, issue of Practical Tax Lawyer. Reproduced with permission.

Corporate acquirers typically expect that seller noncompete agreements will be included in any corporate merger and acquisition (M&A) structure. Robert’s article focuses on the type of transaction in which the target company is a private corporation and the sellers are employee-shareholders. He summarizes the taxation and other considerations related to an M&A transaction in which employee-shareholders are selling the private C corporation stock to a C corporation acquirer. Some of these considerations also apply to the corporate acquirer’s purchase of a subsidiary company of a parent corporation seller. However, the principal focus of Robert’s article is taxation and valuation guidance related to the employee-shareholders’ sale of a closely held corporation. Robert also provides guidance related to the taxation and valuation of any intangible assets (including noncompete agreements) in such an M&A transaction.


 “Evaluating and Applying Control Premiums”

Nathan Novak, a vice president of our firm, delivered this presentation at the Business Valuation and Litigation Services Conference, sponsored by the New York State Society of Certified Public Accountants, which was held virtually on May 16, 2022.

Nate’s presentation begins by introducing the concept of acquisition premiums and control premiums and their implications. He explores empirical data sources for such premiums. Nate compares equity-based premiums to invested-capital-based premiums. Finally, he discusses the application of equity-based premiums and invested-capital-based premiums in the valuation analysis.


 “How We Deal with Economic Disruption and Disequilibrium in the Unit Principle Valuation”

Robert Reilly, a managing director of our firm, delivered this presentation at the 50th annual Wichita Property Tax Conference, which was held in Wichita on July 25, 2022.

Robert’s presentation begins by exploring indications of economic disruptions and disequilibria, including examples of each. He goes on to discuss using a functional analysis and due diligence to identify and quantify the impact of economic disruption on the taxpayer unit value. Robert then explores the impact of economic disruption on each of the three generally accepted property tax appraisal approaches. Finally, he discusses appraiser caveats regarding economic disruptions.


 “Intellectual Property Valuations and Unit Valuation Principle Assessments”

By Robert Reilly, a managing director of our firm, published in the November-December 2021, issue of Journal of Multistate Taxation and Incentives. Reproduced with permission.

Valuation analysts are often called on to value intellectual property (IP) for various state and local taxation purposes. Analysts consider, and often apply, all three generally accepted valuation approaches when valuing intellectual property. The approach(es) used depends on many factors. Many analysts, however, have less experience with the cost approach to IP valuation. Robert’s article focuses on the conceptual principles and the practical applications of the cost approach in IP valuations for ad valorem property tax purposes. The article includes an illustrative example.


 “Noncompete Agreement Considerations in Construction Company Acquisitions”

By Robert Reilly, a managing director of our firm, published in the January-February 2022, issue of Construction Accounting & Taxation. Reproduced with permission.

Corporate acquirers typically expect that seller noncompete agreements will be part of the construction company acquisition negotiations. Robert’s article summarizes the taxation and other structuring considerations related to transactions where employee/shareholders are selling private C corporation stock to a C corporation acquirer. Some of these considerations also apply to the corporate acquirer’s purchase of the corporate subsidiary stock of a parent corporation seller.


 “What Legal Counsel Need to Know about Cost of Capital Calculations in Valuation and Damages Disputes”

By Connor Thurman, a former senior associate of our firm, and Robert Reilly, a managing director of our firm, published in the March 2022, issue of Practical Tax Lawyer. Reproduced with permission.

Estimating the discount rate or capitalization rate is one component of just about every dispute-related private company valuation, damages, or transfer price analysis. The measurement of this component can have a material impact on the analyst’s valuation, damages measurement, or transfer price determination opinion. Connor and Robert’s article summarizes what legal counsel need to know about the discount rate/capitalization rate measurement process.


 “The F Reorganization as Part of the S Corporation Acquisition Transaction Structure”

By Robert Reilly, a managing director of our firm, published in the March 2022, issue of Practical Tax Lawyer. Reproduced with permission.

Many baby boomers are thinking about selling their companies. One popular transaction tax structure for these acquisitions is an Internal Revenue Code section 368(a)(1)(F) reorganization of the private S corporation. Robert’s article considers several of the reasons why owners may want to sell and why private equity firms may want to buy the S corporation target company. The article describes the benefits to both sides of the transaction of the F reorganization. Robert summarizes the procedures for implementing the F reorganization and the tax planning considerations for the transaction participants.


 “Valuation Considerations Related to Equity Incentive Compensation Plans”

By Robert Reilly, a managing director of our firm, published in the March 9, 2022, issue of QuickRead. Reproduced with permission from the QuickRead. Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.


Robert’s article summarizes what analysts need to know about the taxation issues and the security valuation issues related to private company equity incentive compensation programs. It focuses on both the taxation aspects and the valuation aspects of implementing an equity incentive compensation plan at a private company. The article is not intended to provide legal, accounting, or taxation advice. The scope of Robert’s article is limited to stock awards, stock options, and partnership profits interests. While Robert’s article is relevant to all private companies, it is particularly relevant to early-stage and development-stage private companies (including start-up companies).

 “Intellectual Property Valuations: The Relief from Royalty Method”

By Robert Reilly, a managing director of our firm, published in the December 8, 2021, December 15, 2021, January 5, 2022, January 12, 2022, and January 19, 2022, issues of QuickRead. Reproduced with permission from the QuickRead. Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.


This is a five-part article series. This discussion focuses on what valuation analysts (analysts) and owner/operators need to know about one category of intangible property: intellectual property. There are generally accepted cost approach, market approach, and income approach methods that may be used to value intellectual property. This discussion focuses on the application of the market approach. This discussion specifically focuses on one market approach valuation method: the RFR method. Part I of Robert’s article presents an overview of the RFR method and discusses the various categories of intellectual property. Part II of Robert’s article summarizes the typical elements of the intellectual property valuation analysis. This part of the discussion focuses on benchmarking and the use of research databases. Part III describes the application of the RFR method. Part IV presents an illustrative example of the practical application of the RFR method. Finally, Part V presents valuation analyst caveats and reporting best practices related to the intellectual property valuation.

 “Analyst Noncompete Agreement Considerations in Corporate Acquisitions”

By Robert Reilly, a managing director of our firm, published in the February 16, 2022, and February 23, 2022, issues of QuickRead. Reproduced with permission from the QuickRead. Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.


This is a two-part article that focuses on the situation where the target company is a private corporation, and the sellers are employee/shareholders. This discussion summarizes the taxation and valuation considerations related to a transaction where employee/shareholders are selling the private C corporation stock to a C corporation acquirer. The principal focus of this discussion will be on valuation and taxation guidance related to the employee/shareholders’ sale of a closely held corporation. Valuation analysts are not expected to be M&A transaction tax advisors or deal structuring experts. However, valuation analysts who practice in the M&A transaction arena are expected to work with the transaction principal’s legal counsel, tax accountants, and other professional advisors. Valuation analysts who practice in the M&A discipline are expected to understand the basics of how intangible asset identification and valuation influence the taxation aspects of the transaction.

 “Cost Approach to Intellectual Property Valuation”
By Robert Reilly, a managing director of our firm, published in the October 13, 2021, October 20, 2021, October 27, 2021, and November 3, 2021, issues of QuickRead. Reproduced with permission from the QuickRead. Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.
This is a four-part article series. Robert’s articles focus on the conceptual principles and the practical applications of the cost approach in the development of intellectual property valuations. Part I of Robert’s article focuses on the conceptual principles that support the application of the cost approach to intellectual property valuation. Part II describes the generally accepted cost approach valuation methods. Part III examines the practical measurement procedures related to intellectual property cost metrics and obsolescence metrics. Finally, Part IV presents several illustrative examples of the application of the cost approach in hypothetical intellectual property valuation scenarios.

 Asset-Based Approach to Business Valuation – Conceptual Foundations and Practical Applications
Robert F. Reilly, a managing director of our firm, delivered this presentation at the National Association of Certified Valuators and Analysts (NACVA) Minnesota Chapter Conference, which was held on September 29, 2021, in Plymouth, Minnesota.
Robert’s presentation begins by looking at the reasons to consider and apply the asset-based approach. He explores the strengths and weaknesses of this approach. Robert discusses the generally accepted methods and procedures within the asset-based approach. In particular, Robert summarizes the asset accumulation method and the net asset value method and provides examples of each method. In addition, he provides a brief discussion of the cost approach to valuing intangible assets.
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 “What Tax Lawyers Need to Know about the Measurement of Functional and Economic Obsolescence in the Industrial or Commercial Property Valuation” (Parts 1 and 2)
By Connor Thurman, a senior associate in our Portland office, and Robert F. Reilly, a managing director of our firm, published in the November 2020 and September 2021 issues of the Practical Tax Lawyer.
Considerations of functional obsolescence and external obsolescence are important procedures in the application of the cost approach to value industrial or commercial property. Connor and Robert’s article summarizes best practices for both the identification and the measurement of obsolescence. In other words, their article describes what tax counsel needs to know about the measurement of obsolescence in the cost approach valuation of a taxpayer’s industrial or commercial property. First, their article summarizes what tax counsel needs to know about the various forms of obsolescence that should be considered in the cost approach valuation of industrial and commercial property for SALT purposes. Second, the article summarizes what tax counsel needs to know about the practical procedures that the client property owner, the analyst, or the taxing authority can apply to recognize the existence of any property obsolescence and measure the amount of any property obsolescence. Third, the article considers various issues related to documenting the existence of any property obsolescence as well as issues related to reporting the measurement of any property obsolescence. Fourth, the article suggests potential tax counsel responses to assessment authority objections regarding the recognition of obsolescence in the application of the cost approach in the industrial or commercial property assessment. The article concludes with an illustrative example of the application of the cost approach to the valuation of an intangible asset.
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 “Considerations in the Acquisition of a Tax Loss Construction Company”
By Robert F. Reilly, a managing director of our firm, published in the November May/June 2021 issue of Construction Accounting & Taxation.
Merger and acquisition (M&A) activity continues at a brisk pace in many segments of the construction industry. This trend in construction industry M&A activity has continued despite general concerns about COVID-19 as a national health issue and despite the impact of the pandemic on the national economy. During this pandemic, some companies in some industry segments have been quite successful. They have experienced increased revenue , increased profitability, and increased taxable income. Such companies are often attractive M&A target companies. During this same period, other companies have experienced operational issues, decreased revenue, negative profitability, and tax-related net operating losses. In addition to their other attributes, the tax attributes (including their net operating loss, or NOL, carryforwards) of these companies may also make them attractive M&A target companies. Robert’s article summarizes the factors that acquirers and their tax and other professional advisers should consider when structuring an M&A transaction that involves a target corporation with such tax attributes.
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 “F Reorganizations in Construction Company Acquisitions”
By Robert F. Reilly, a managing director of our firm, published in the November July/August 2021 issue of Construction Accounting & Taxation.
Recently, private equity firms have become active with regard to acquiring and consolidating private construction companies in many industry sectors. One transaction tax structure that is particularly popular in private equity firm acquisitions is an IRC Section 368(a)(1)(F) reorganization of the private S corporation. Robert’s article considers several of the reasons why owners may want to sell S corporation construction companies – and why private equity firms may want to buy them. In particular, his article describes the benefits to the seller of a Section 368(a)(1)(F) reorganization as a step in the company sale transaction. Robert also describes the benefits to the private equity buyers (and certain other types of buyers) of the “F reorganization” as a component of the transaction tax structure. He also summarizes the procedures for implementing the F reorganization and the tax planning considerations for the merger and acquisition (M&A) transaction participants – and their tax and other transaction advisers – with regard to the F reorganization as part of the private construction company acquisition structure.
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 “Tax Counsel Considerations in the Acquisition of a Tax Loss Target Company”
By Robert F. Reilly, a managing director of our firm, published in the September 2021, issue of Practical Tax Lawyer.
Tax counsel—and valuation analysts and other financial advisers (analysts)—are often retained to advise acquisitive clients with regard to proposed merger and acquisition (M&A) transactions. The analysts typically focus on the pricing and structuring of the proposed M&A transaction, while tax counsel consider all of the income tax and other tax planning and compliance issues related to structuring and completing the M&A transaction. The analysts may be expected to work with, and provide assistance to, the acquirer’s taxation, legal, and other professional advisers, particularly in the assessment of the risks and expected returns of the proposed transaction. Tax counsel should advise corporate acquirers and their analysts to be careful when pricing and structuring the potential acquisition of M&A target corporations with NOL and certain other income tax attributes. Robert’s article summarizes the factors that tax counsel, acquired clients, and the client’s analysts should all consider when structuring an M&A transaction that involves a target corporation with such income tax attributes.
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 “Financial Advisory Services and S Corporation Acquisitions”
By Robert Reilly, a managing director of our firm, published in the August 4, 2021, issue of QuickRead. Reproduced with permission from the QuickRead (August 4, 2021). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.
Analysts should be aware that one transaction tax structure that is particularly popular regarding private equity firm acquisitions is an Internal Revenue Code Section 368(a)(1)(F) reorganization of the private S corporation. The article discusses several of the reasons why owners may want to sell—and why private equity firms may want to buy—an S corporation target company. The article describes what analysts need to know about the benefits to the S corporation sellers of a Section 368(a)(1)(F) reorganization as one step in the private company sale transaction. In addition, it also describes what analysts need to know about the benefits to the private equity buyers (and to certain other types of S corporation buyers) of the “F reorganization” as a component of the transaction tax structure. The article concludes with a summary of what analysts need to know about the procedures for implementing the F reorganization and also summarizes the tax planning considerations for the merger and acquisition (M&A) transaction participants—and for their analysts and tax counsel—about the F reorganization as part of the private company acquisition structure.
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 Developing Unit Principle Valuations during COVID-Impacted Economic Uncertainty
Robert F. Reilly, a managing director of our firm, delivered this presentation at the annual Wichita Property Tax Conference. The conference was held virtually this year on July 27-28, 2021.
Robert began by reviewing unit principle valuation, including valuation approaches and methods. He explained how analysts deal with risk factors in unit principle valuations. In particular, Robert focused on COVID-impacted economic uncertainty as a risk factor. Robert discussed the valuation variables for each of the three generally accepted valuation approaches. Finally, Robert reviewed the proper method of documenting the unit principle valuation analysis.
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 Intangible Asset Analysis—Litigation Valuations and Fair Value Measurements
Robert F. Reilly, a managing director of our firm, delivered this presentation at the 2021 Business Valuation Conference sponsored by the Texas CPA Society. The conference was held virtually on July 29, 2021.
Robert began by reviewing the reasons to value intangible assets, including fair value measurements. He summarized the generally accepted valuation approaches and methods. Robert then focused on the cost approach and the methods and procedures within this approach. He explored the topics of physical deterioration, functional obsolescence, and economic obsolescence. Robert discussed reaching the cost approach value conclusion, including the tax amortization benefit adjustment. Finally, Robert provided a list of common misapprehensions analysts have with the cost approach. He concluded with an illustrative example of this valuation approach.
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 “Empirical Benchmarks to Estimate the Company-Specific Risk Premium”
By Connor Thurman, a senior associate in our Portland office, and Robert Reilly, a managing director of our firm, published in the March/April 2021, issue of Construction Accounting and Taxation.
Estimating the cost of capital is one component of every construction company’s valuation, damages, or transfer price analysis. This article continues the discussion from an earlier article, “Considering a Company-Specific Risk Premium in the Cost of Capital Measurement,” which appeared in the January/February 2021 issue. Connor and Robert’s article describes the various empirical data sources that analysts may consider as proxies, benchmarks, or approximations in the estimation of the construction company company-specific risk premium.
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  “Considering a DLOC in the Construction Company Transfer Tax Valuation”
By Robert Reilly, a managing director of our firm, published in the January/February 2021, issue of Construction Accounting and Taxation.
In the transfer tax valuation of a construction company, discounts are often applied for lack of marketability and for lack of control (DLOC). The ownership control consideration involves how much influence the subject ownership interest has over the operations of the private construction company. The DLOC is not an absolute consideration, but is represented by a continuum. Robert’s article summarizes the concept of ownership control in a transfer tax valuation, the reasons why analysts apply a valuation adjustment in a private construction company business valuation, the theoretical models and empirical studies that analysts typically consider to measure the amount of any DLOC, and the factors that may influence the magnitude of the DLOC in any particular valuation.
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  “Considering a Company-Specific Risk Premium in the Cost of Capital Measurement”
By Connor Thurman, a senior associate in our Portland office, and Robert Reilly, a managing director of our firm, published in the January/February 2021, issue of Construction Accounting and Taxation.
Estimating the cost of capital is one component of every construction company’s valuation, damages, or transfer price analysis. There are several methods that analysts may apply to measure the cost of equity capital when it is a component of the discount rate or capitalization rate. These methods are summarized in Connor and Robert’s article. An important component of the cost of equity capital is the consideration of investment-specific (or company-specific) risk (sometimes referred to as “alpha”). This article focuses on the factors that analysts may consider in the alpha estimation.
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  “Application of the Tax Amortization Benefit Valuation Adjustment”
By Lisa Tran, a vice president in our Portland office, and Travis Royce, an associate in our Portland office, published in the May 12, 2021, issue of QuickRead. Reproduced with permission from the QuickRead (May 12, 2021). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.
The so-called tax amortization benefit (TAB) adjustment represents the present value of the federal income tax savings resulting from the tax amortization of an acquired intangible asset over a statutory period. Internal Revenue Code Section 197 allows the cost of certain acquired intangible assets to be amortized for federal income tax purposes. However, not all acquired intangible assets are subject to such amortization tax deductions. Analysts should apply the so-called TAB adjustment to an intangible asset valuation analysis only when it is appropriate. Lisa and Travis’s article summarizes what analysts should know before applying the TAB adjustment to an intangible asset valuation analysis.
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  “Analyst Considerations in the Valuation of a Tax Loss Target Company Acquisition”
By Robert F. Reilly, a managing director of our firm, published in the April 14, 2021, issue of QuickRead. Reproduced with permission from the QuickRead (April 14, 2021). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.
Robert’s article summarizes the factors that acquirers—and their valuation and other financial advisers—should consider when structuring an M&A transaction that involves a target company with such income tax attributes.
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  “Functional Analysis as Part of a Valuation, Damages, or Transfer Price Analysis”
By Robert F. Reilly, a managing director of our firm, published in the February 2021 issue of Practical Tax Strategies.
A functional analysis is one important component of a transfer price analysis. This analysis is often applied for purposes of assessing the comparability of the subject entity to selected guideline entities. Robert examines the reasons for performing such a functional analysis. He discusses the impact of the analysis on valuation estimates, on damages measurements, and on transfer price determinations. Robert summarizes the 12 steps of a functional analysis. Finally, he discusses proper documentation of a functional analysis.
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  “Due Diligence Regarding Shareholder Agreements in S Corporation M&A Transactions”
By Robert Reilly, a managing director of our firm, published in the January 2021 issue of Practical Tax Strategies.
Analysts may be asked to provide transaction pricing and structuring advice to sellers of private companies operating in all industry sectors. Many of these private companies are tax pass-through entities. In an M&A transaction regarding an S corporation target company, both the buyer and the sellers should perform reasonable due diligence procedures to ensure that there are no problems with regard to the target company’s S corporation tax status. Analysts often assist with such due diligence. Robert’s article focuses on the due diligence considerations related to the S corporation shareholder agreement. See More

  Evaluating and Applying Control Premiums
Tim Meinhart, a managing director of our firm, and Nate Novak, a vice president in our Chicago office, delivered this presentation at a webinar. The webinar was presented by Business Valuation Resources and took place on March 31, 2021.
Tim and Nate begin their presentation with an introduction to acquisition premiums and control premiums and discuss the differences between these two terms. They go on to explore empirical data sources for both acquisition premiums and control premiums. They summarize the issue of prerogatives of control. Tim and Nate compare equity-based premiums to invested capital premiums. Finally, they discuss the application of equity premiums and invested capital premiums in the valuation analysis.
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  “Benchmarks to Estimate the Property-Specific Risk Premium in Unit Principle Valuations”
By Connor Thurman, a senior associate in our Portland office, and Robert Reilly, a managing director of our firm, published in the January 2021 issue of Journal of Multistate Taxation and Incentives.
This is the second part of the article “Property-Specific Risk Premiums and Unit Principle Valuations.” Connor and Robert’s article focuses primarily on market-derived, empirical data sources that an analyst may consider as a proxy in the quantitative estimate of a property-specific risk premium. The article also summarizes one procedure that affects both the qualitative and the quantitative assessment of the property-specific risk premium: the functional analysis of the taxpayer property considered in the unit principle valuation.
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  “Buy-Sell Agreements for Operational and Taxation Purposes”
By Robert Reilly, a managing director of our firm, published in the November/December 2020, issue of Construction Accounting and Taxation.
Valuation analysts, legal counsel, and tax advisers often work together to design and implement buy/sell agreements for closely held companies. Such agreements are intended to achieve a number of operational and taxation objectives—both for the company owners and for the company itself. Robert’s article summarizes typical buy/sell agreement structures, ownership transfer funding mechanisms, ownership transferability restrictions, valuation and pricing provisions, and transfer tax planning and compliance considerations. He focuses primarily on buy/sell agreements related to closely held tax pass-through entities, but the issues discussed also apply to closely held C corporations.
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  “Property-Specific Risk Premium and Unit Principle Valuations”
By Connor Thurman, a senior associate in our Portland office, and Robert Reilly, a managing director of our firm, published in the November/December 2020 issue of Journal of Multistate Taxation and Incentives.
Connor and Robert’s article focuses primarily on the unit principle of property valuation. Analysts always consider—and frequently apply—the income approach in the unit principle property valuation. There are several generally accepted methods that the analyst may apply to measure the taxpayer unit cost of equity capital. These methods are summarized in this article. The article then focuses on one component in this analysis—alpha, or the company-specific risk premium.
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 “Best Practices for Estimating the Company-Specific Risk Premium—Parts 1, 2, 3, and 4”
By Robert Reilly, a managing director of our firm, and Connor Thurman, a senior associate in our Portland office, published in the December 9, 2020, December 16, 2020, December 30, 2020, and January 6, 2021 issues QuickRead. Reproduced with permission from the QuickRead (December 9, 2020, December 16, 2020, December 30, 2020, and January 6, 2021). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved.
The income approach is one of the three generally accepted approaches to valuation. All income approach methods typically include the application of either a present value discount rate or a direct capitalization rate. One consideration in just about every discount rate measurement method is a component related to investment-specific risk. This risk component is called by many names in the professional literature, including unsystematic risk, asymptomatic risk, nondiversifiable risk, nonsystematic risk, project-specific risk, residual risk, investment-specific risk, and company-specific risk. This risk component is also sometimes called alpha. The identification and quantification of alpha—or the subject-specific risk component—is sometimes a controversial issue in the private company valuation. Robert and Connor summarize best practices on what should be considered in the analysis of this unsystematic risk component. Part 1 of Robert and Connor’s article focuses on the factors that analysts may consider in developing the alpha estimates when selecting the cost of equity capital for a private company valuation. Part 2 of their article describes the differences between systematic and unsystematic risk in the private company valuation. In Part 3, Robert and Connor present empirical evidence that analysts may consider when estimating the company-specific risk as part of the private company cost of capital measurement. Finally, in Part 4, they summarize best practices related to the functional analysis in developing the company-specific risk premium estimate.
Part 1
Part 2
Part 3
Part 4

  “Flawed M&A Deal Processes That Can Lead to Litigation”
By Sam Nicholls, a vice president in our Atlanta office, published in the October 13, 2020, issue of Business Law Today, a publication of the American Bar Association.
In M&A litigation, the parties to the lawsuit each typically retain an independent valuation analyst to estimate the fair value of the target company stock and to provide expert testimony. Sam’s article first examines events that can lead to M&A disputes. He provides examples of courts deciding that the M&A deal process was flawed. Sam goes on to explore examples of when the investment bank’s fee structure led to a flawed deal process. He also discusses the use of management-prepared projections and provides examples of these projections being accepted or rejected by the court.
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  “The Role of the Investment Banker Compared to the Independent Valuation Analyst in M&A Transactions and Litigation”
By Sam Nicholls, a vice president in our Atlanta office, published in the December 2, 2020, issue of Business Law Today, a publication of the American Bar Association.
Fairness opinions for M&A transaction may be provide by either an investment banker or an independent valuation analyst. When these transactions are disputed, an independent valuation analyst hired by either side of the dispute may discover certain analyses performed by the investment banker that are unsupported. Sam’s articles focuses on fairness opinions and the M&A deal process. He examines the role of the valuation analyst as an expert witness opining on fair value in disputed transactions. Sam provides examples of flaws in analysis by investment bankers providing fairness opinions.
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  “Functional Analysis in the Intellectual Property Valuation, Damages, or Transfer Price Measurement”
By Robert Reilly, a managing director of our firm, published in the September 2020 issue of les Nouvelles.
A functional analysis is one important component of a transfer price analysis, damages analysis, or valuation involving intellectual property. Robert’s article focuses on the development of, documentation of, and reporting of the functional analysis as one component of an intellectual property analysis. n occur when investment bankers provide both investment banking services and fairness opinion services. He discusses the impact of the functional analysis on the damages measurement, valuation estimate, or transfer price measurement.
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 “Intellectual Property Valuation within a Bankruptcy Context, Part One”
By Robert Reilly, a managing director of our firm, published in the September 2020 issue of les Nouvelles.
There are many reasons why a licensing executive or related professional may be asked to value debtor company intellectual property within a bankruptcy environment. Part One of Robert’s article summarizes the generally accepted intellectual property valuation approaches and methods that analysts typically consider in a bankruptcy-related assignment. Robert’s article includes a discussion of data gathering and due diligence.
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 “Are Fairness Opinions Enough—M&A Transaction Valuation Considerations Vis-à-Vis Post-Transaction Shareholder Litigation”
By Fady Bebawy, a vice president in our Chicago office, published in the Fall 2020 issue of Deal Points.
Fady’s article examples certain factors that call into question the reliability of a fairness opinion. These factors may lead to more post-transaction shareholder litigation. Fady concludes with considerations for providing a shareholder valuation opinion and eliminating the conflict of interest optics that can occur when investment bankers provide both investment banking services and fairness opinion services.
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  Tax-Affecting and Lessons from the Estate of Jones
Robert Reilly, a managing director of our firm, delivered this presentation to the ASA Philadelphia Chapter Business Valuation Conference, which was held September 10, 2020. The conference was sponsored by the Philadelphia Chapter of the American Society of Appraisers.
Robert begins his presentation with an introduction to pass-through entities. He goes on to discuss the fundamentals and mathematics of tax-affecting. Robert then reviews the position of the IRS on tax-affecting. He summarizes recent judicial precedent on this topic. Robert wraps up his presentation with a detailed presentation on the Estate of Aaron U. Jones v. Commissioner case (in which Robert testified).
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  “Property Valuation of Computer Software”
By Robert Reilly, managing director of our firm, published in the February 2020 issue of Journal of Multistate Taxation and Incentives.
In some taxing jurisdictions, the internally developed software of an industrial or commercial taxpayer company may be exempt from ad valorem taxation. In this article, Robert discusses the generally accepted approaches and methods analysts use to value software for property tax purposes. His article focuses on the cost approach to valuing software. In particular, Robert explores the replacement cost new less depreciation method within the cost approach for valuing computer software.
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  “Valuation Treatment of the Repurchase Obligation Liability”
By Kyle Wishing, a vice president in our Atlanta office, published in the Summer 2020 issue of Journal of Employee Ownership, a publication of the National Center for Employee Ownership.
Kyle’s article begins by discussing the concept of the repurchase obligation for ESOP companies in general. He goes on to examine the underlying valuation theory and the various regulations that affect this obligation. Kyle explores the various interpretations of fair market value that can affect the repurchase obligation issue. For example, there is the transfer tax interpretation, the ESOP-hybrid interpretation, and the within-ESOP interpretation. Kyle presents an illustrative example of the valuation treatment of the repurchase obligation using the ESOP-hybrid interpretation and the within-ESOP interpretation. He presents both an implicit repurchase obligation application and an explicit repurchase obligation application.
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  “Valuation Analyst Considerations Regarding Closely Held Company Buy/Sell Agreements”
By Robert Reilly, managing director of our firm, published in the August/September 2020 issue of Financial Valuation and Litigation Expert.
Ownership succession and estate planning are two common concerns of private company owners. Such owners sometimes utilize buy/sell agreements to help address both of these concerns. Robert’s article focuses primarily on buy/sell agreements related to closely held tax pass-through entities. He summarizes the two primary types of buy/sell agreements. Robert describes several ways in which these two types of buy/sell agreements fund the redemption of the company owner’s equity interests. He explains many of the reasons why the company owner or the company itself would implement a buy/sell agreement. In particular, he focuses on the taxation planning, compliance, and controversy considerations with regard to closely held company buy/sell agreements. Robert explores the business valuation provisions of the buy/sell agreement. In particular, he considers the rules and the limitations related to the company owner’s reliance on a buy/sell agreement valuation formula for estate tax planning and estate tax compliance purposes.
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  “Fifth Circuit Disallows Discount for Lack of Control”
By Fady Bebawy, a vice president in our Chicago office, published in the April 8, 2020 issue of Wealth Management, www.wealthmanagement.com.
Fady discusses the recent Fifth Circuit Court of Appeals ruling in Estate of Strightoff v. Commissioner. In that case, the court ruled that the estate wasn’t entitled to discounts for lack of control for a substituted limited partnership interest with control rights.
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 Water System Valuation: RCNLD Analysis
Kevin Zanni, a managing director in our Chicago office, along with Mark Rodriguez of MR Valuation Consulting, presented a webinar. The webinar was sponsored by California Water Association, the Public Utilities Commission of the State of California and the California State Water Resources Control Board. The webinar was held on August 19, 2020.
Kevin and Mark review the valuation engagement process and discuss general valuation theory. They present an overview of relevant California statutes and guidance for water system valuation. Kevin and Mark explore both reproduction cost and replacement cost and discuss the differences. Finally, they discuss various forms of obsolescence that may apply in water system valuations, including economic obsolescence and functional obsolescence.
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  “Valuation Treatment of the ESOP Repurchase Obligation Liability”
By Robert Reilly, managing director of our firm, published in the June 10, 2020 issue of QuickRead. Reproduced with permission from the QuickRead. Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved. To learn more, please visit www.QuickReadBuzz.com
There are certain valuation aspects that are unique to ESOP sponsor company valuations. The ESOP repurchase obligation is one of those aspects. Robert’s article provides a hypothetical ESOP sponsor company valuation to illustrate the alternative valuation treatments for the repurchase obligation on the sponsor company share price conclusion. This article is intended to clarify and enhance the ongoing discussion among valuation analysts regarding the treatment and presentation of the repurchase obligation in valuations performed for ESOP administration and regulatory compliance purposes.
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  “ESOP Implementation Considerations: Leverage ESOP vs. Non-Leverage ESOP”
By Ben Duffy, a manager in our Atlanta office, published in the June 2, 2020 issue of QuickRead. Reproduced with permission from the QuickRead. Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved. To learn more, please visit www.QuickReadBuzz.com
An employee stock ownership plan (ESOP) is a qualified retirement plan that allows employees to hold equity in the sponsor company that employs them. There are various strategies that may be considered when the sponsor company forms and ESOP. One important structural decision regarding the ESOP formation is whether the ESOP will be leveraged or nonleveraged. Ben’s article compares the leveraged ESOP structure and the nonleveraged ESOP structure. He explores various characteristics and advantages associated with leveraged and nonleveraged ESOP structures.
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  “Intellectual Property Valuations within Bankruptcy Controversies—Parts 1, 2, and 3”
By Robert Reilly, a managing director of our firm, published in the February/March 2020, April/May 2020, and June/July 2020 issues of Financial Valuation and Litigation Expert. Reproduced with permission.
There are many reasons why a valuation analyst may be asked to value debtor company intellectual property within a bankruptcy environment. Part 1 of Robert’s article explains and illustrates the generally accepted intellectual property valuation approaches and methods that analysts typically consider in a bankruptcy-related controversy. Robert also describes the intellectual property valuation synthesis and conclusion process. And, Robert provides recommended best practices related to (1) the attributes of an effective intellectual property valuation report and (2) the types of professionals who should serve as intellectual property valuation testifying experts. Part 2 of this article describes the three general approaches to IP valuation: the cost approach, the market approach, and the income approach. In Part 3, Robert examines the income approach as it is used in IP valuations within the bankruptcy context. Robert also discusses the synthesis and conclusion procedures. Finally, Robert presents the attributes of an effective valuation expert report and identifies who should perform IP valuations.
Part 1
Part 2
Part 3

 “Estimating Nonprofit Corporation Asset Values—Parts I, II, and III”
By Kevin Zanni, a managing director in our Chicago office, published in the January 29, 2020, February 5, 2020, and February 12, 2020, issues of QuickRead. Reproduced with permission from the QuickRead (January 29, 2020, February 5, 2020, and February 12, 2020). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved. To learn more, please visit www.QuickReadBuzz.com.
Nonprofit businesses are often involved in arm’s-length transactions. Kevin’s article provides an example of certain steps and procedures that can be used to value the assets of a nonprofit business. He addresses the procedures for selecting arm’s length royalty rates for technologies and other intangible assets. Kevin also discusses best practice concepts applied in the valuation of the total assets of a nonprofit business. Functional obsolescence issues are examined as well. Kevin provides several examples in this series of articles.
Part 1
Part 2
Part 3

  “Consider the Sale of the Company to an Employee Stock Ownership Plan”
By Robert Reilly, a managing director of our firm, published in the September/October 2019 issue of Construction Accounting and Taxation. Reproduced with permission.
Owners of private companies, including construction companies, looking for an exit strategy may consider implementing an employee stock ownership plan (ESOP). As part of this consideration, a financial feasibility analysis may be performed. Robert summarizes the analyst’s role in such a feasibility analysis. He explains how the information developed in this analysis may be used by the owners, advisers, and other parties to decide how to structure such an ownership transition transaction. Robert goes on to discuss quality of earnings, liquidity, and plan design analyses.
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  “Private Company Stock-Based Compensation Arrangements to Attract or Retain Key Employees”
By Robert Reilly, a managing director of our firm, published in the February 20, 2020, issue of QuickRead. Reproduced with permission from the QuickRead (February 20, 2020). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved. To learn more, please visit www.QuickReadBuzz.com.
To both attract and retain key employees, many private companies have added stock-based compensation grants to their portfolio of employee compensation arrangements. Stock-based compensation may include such securities as restricted stock awards, restricted stock units, nonqualified stock options, and incentive stock options. An important component of any private company stock-based compensation arrangement is the value of the private company stock. Robert’s article summarizes some of the basic but important income tax considerations—for both the employer and the employees—involved in such arrangements.
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  “Considering the Subject Industry When Applying the Income Approach in a Family Law Context”
By Justin Nielsen, a senior director with FTI Consulting, and Charlene Blalock, a senior research analyst in our Portland office, published in the Winter 2020 issue of the American Journal of Family Law.
The income approach is often performed in the valuation of closely held businesses for marital dissolution purposes. Analysts often obtain projections from the subject company management. Industry research may be helpful in performing due diligence and reviewing the reasonableness of such management-prepared projections. This article summarizes the relationship between the income approach and the subject industry. In addition, it provides practical guidance regarding the analyst’s role in properly addressing the subject industry when applying the income approach and conducting company management interviews in a family-law-related business valuation.
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  “The Role of the Valuation Analyst in an ESOP Formation Financial Feasibility Analysis—Parts I and II”
By Robert Reilly, a managing director of our firm, published in the January 8, 2020, and January 15, 2020, issues of QuickRead. Reproduced with permission from the QuickRead (January 8, 2020, and January 15, 2020). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved. To learn more, please visit www.QuickReadBuzz.com.
Owners of private companies looking for an exit strategy may consider implementing an employee stock ownership plan (ESOP). As part of this consideration, a financial feasibility analysis may be performed. In Part I of his article, Robert summarizes the analyst’s role in such a feasibility analysis. He explains how the information developed in this analysis may be used by the owners, advisers, and other parties to decide how to structure such an ownership transition transaction. In Part II of the article, Robert focuses on quality of earnings, liquidity, and plan design analyses.

Part One
Part Two

  “The Treatment of Synergistic Value in Dissenting Shareholder Appraisal Rights Matters—Parts I and II”
By Brandon McFarland, an associate in our Atlanta office, published in the October 2, 2019, and October 9, 2019, issues of QuickRead. Reproduced with permission from the QuickRead (October 2, 2019, and October 9, 2019). Published by the National Association of Certified Valuators and Analysts® (NACVA®). All rights reserved. To learn more, please visit www.QuickReadBuzz.com.
Brandon discusses recent judicial decisions issued by the Delaware Court of Chancery in which synergistic value was a consideration. The decisions summarized in this article include DFC Global Corporation v. Muirfield Value Partners; Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd.; Verition Partners Master Fund Ltd. v. Aruba Networks, Inc.; and In Re Appraisal of Solera Holdings, Inc.

Part One
Part Two

  Tax-Affecting and Other Valuation Issues Affecting Pass-Throughs after Estate of Aaron Jones v. Commissioner, T.C. Memo 2019-101
Curtis Kimball, a managing director in our Atlanta office, and Scott Miller, a vice president in our Portland office, along with Steven Gorin of Thompson Coburn, presented a webinar. The webinar was sponsored by Leimberg Information Services. The webinar was held on September 26, 2019.
Curt and Scott first summarize what tax-affecting is and summarize some of the tax-affecting models available. They then discuss the case of Estate of Aaron U. Jones v. Commissioner and examine how the valuation expert (Robert Reilly of our firm) persuaded the Tax Court to accept tax-affecting for the first time. Curt and Scott explore issues to consider in building a case for tax-affecting and discuss other issues that valuation analysts consider in valuing interests in partnerships, S corporations, and other pass-through entities.

Read

  “The Cost of Equity Capital—Parts I and II”
By John Kirkland, an associate in our our Atlanta office, and Nicholas Henriquez, published in the December 4, 2019, and December 11, 2019, issues of QuickRead. Reproduced with permission from QuickRead, published by the National Association of Certified Valuators and Analysts®, www.QuickReadBuzz.com. All rights reserved.
In Part I of their article, John and Nicholas summarize the cost of equity capital measurement process. They then explore the capital asset pricing model, the modified capital asset pricing model, and the build-up model. In Part II of their article, John and Nicholas describe some of the issues related to the cost of equity capital. Some of these issues are controversial in the valuation profession. Issues discussed include the size risk premium, the company-specific risk premium, the market-derived equity risk premium, and the industry risk premium. They also examine the process of selecting guideline publicly traded companies to use for the beta measurement.

Part One
Part Two

  Tips for Reviewing Management’s Financial Projections
Kyle Wishing, a manager in our Atlanta office, and Seth Webber, a principal with BerryDunn, delivered this presentation to the Employee Owned 2019 Conference, sponsored by the ESOP Association. The conference was held in Las Vegas November 13-15, 2019.
Kyle and Seth discuss the importance of financial projections and common methods applied in the preparation of projections. They then explore common tools that analysts apply to review projections, These tools include common-sized financial statements, ratio analysis, industry benchmarks, and comparison to prior projections. Kyle and Seth also discuss behavioral considerations, including common types of behavioral bias.

Part One

  Valuation Methodology Pitfalls, Valuation Due Diligence Best Practices, and Estate of Aaron U. Jones v. Commissioner
Kevin Zanni, a managing director in our Chicago office delivered this presentation to the Closely Held Asset Management Group of J.P. Morgan on October 1, 2019.
Kevin summarized the generally accepted business valuation approaches and methods, including common errors in applying such methods. He reviewed two common methods withing the market approach. Kevin also discussed the discounted cash flow method of the income approach, including cost of capital considerations. Finally, Kevin reviewed the recent Tax Court decision in the matter of Estate of Aaron U. Jones v Commissioner. Robert Reilly of our firm was the testifying expert for the taxpayer in that case. Part One

  “Confronting Behavior Bias—Parts I and II”
By Kyle Wishing and Ben Duffy, managers in our Atlanta office, published in the October 23, 2019, and October 30, 2019, issues of QuickRead. Reproduced with permission from QuickRead, published by the National Association of Certified Valuators and Analysts®, www.QuickReadBuzz.com. All rights reserved.
Kyle and Ben’s explores the review and assessment of financial projections that are prepared as part of a corporate transaction. They draw from various aspects of behavioral finance in order to improve the process of reviewing financial projections. Kyle and Ben’s article provides a road map for fiduciaries and financial advisers to discover potential forms of bias in financial projections. Common forms of bias are examined and questions to ask are provided. In part II, Kyle and Ben discuss company-specific considerations related to financial projections.

Part One
Part Two

  “Intellectual Property Valuations for Family Law Purposes” Parts I and II
By Robert Reilly, a managing director of our firm, and Casey Karlsen, a senior valuation analyst with Berry Dunn, published in the Summer 2019 and Autumn 2019 issues of the American Journal of Family Law.
The valuation of intellectual property is often an issue in family law matters. There are three generally accepted approaches to the valuation of intellectual property. Robert and Casey’s article focuses on the market approach to valuation, and specifically on the relief from royalty method. They review common royalty rate data sources. Robert and Casey also discuss normalization adjustments to royalty rate data. Finally, their articles provide an illustrative example of an intellectual property valuation.

Part One
Part Two

  Standards of Value and Premises of Value—What Is Appropriate for Unit Valuations?
Robert Reilly, a managing director of our firm, and John Ramirez, a vice president of our firm and director of our property tax valuation services practice, delivered this presentation to the 49th Annual Taxation of Communications, Energy, and Transportation Properties Conference. The conference was held in Wichita, Kansas July 28-August 1, 2019.
Many state assessment authorities apply the unit valuation principle to value properties that are centrally assessed. Robert and John’s presentation discusses applying the correct standard and premise of value in unit principle property tax valuations. They examine defining the unit of property to be valued. Robert and John discuss using fair value purchase price allocations as an indication of fair market value in the valuation of the taxable unit. They consider the differences in fair value and fair market value procedures and valuation variables and review examples of the calculation differences. Robert and John summarize applying investment value transactional data when developing fair market value valuations and considering differences in investment value transactional data and fair market value valuations. They review examples of these calculation differences.

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  Finding Alpha—Measuring the Size Risk Premium and Company-Specific Risk Premium in the Unit Principle Valuation Cost of Capital
Robert Reilly, a managing director of our firm, and Connor Thurman, an associate in our Portland office, delivered this presentation to the 49th Annual Taxation of Communications, Energy, and Transportation Properties Conference. The conference was held in Wichita, Kansas July 28-August 1, 2019.
The measurement of alpha is a component of the discount rate and the capitalization rate. Robert and Connor explore industries that are often subject to the unit principle of valuation. They discuss the components of alpha in measuring the discount rate and the cap rate. Robert and Connor examine the measurement of the components of alpha. Finally, they provide illustrative examples of the application of alpha in a unit principle valuation.

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  ESOP Plan Designs That Work
Jason Bolt, a manager in our Portland office, delivered this presentation to a conference in Bellevue, Washington, that was held on July 11, 2019. The conference was sponsored by the National Center for Employee Ownership and was called “ESOP Nuts and Bolts: What You Need to Know About Employee Stock Ownership Plans.
There is no one-size-fits-all ESOP plan. The right plan depends on many factors. Jason discusses areas that cause confusion in the design of an ESOP plan. These issues are best dealt with up front. Jason explores the steps needed to set up an ESOP and summarizes ESOP plan design best practices.

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  “Due Diligence Procedures in Forensic Analyses”
By Robert Reilly, a managing director of our firm, published in the March/April 2019 issue of Construction Accounting and Taxation.
Construction company controversy matters sometimes involve valuation, damages, and other economic analyses. Construction company owners often need to retain a specialized forensic analyst to provide consulting or testifying expert services related to business valuation, damages analysis, transfer price analysis, forensic accounting, and other issues. The analyst often conducts due diligence interviews as part of the forensic analysis. Robert’s article provides guidance to the company owner as to what to expect during the due diligence interview process. His article also provides a checklist for the forensic analyst regarding topics to cover during the due diligence investigation.

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  No SPACE for Intangibles—Understanding How to Identify and Remove Intangibles
John Ramirez, a vice president of our firm and director of our property tax valuation practice, along with Brad Gorski, director of personal property at Paradigm Tax Group, delivered this presentation to the 43rd Annual Conference of the Institute for Professionals in Taxation. The conference was held in Vancouver, BC, June 24-27, 2019.
Intangible assets are valuable property that most corporate taxpayers own. For property tax purposes, most taxing jurisdictions do not tax intangible assets. Often, assessors and taxpayers fail to exclude intangible asset value from property tax assessments. John and Brad’s presentation explores property valuation approaches and methods that may include intangible asset value. They also examine generally accepted intangible asset valuation approaches. They then discuss methods for extracting intangible asset value from the total property value.

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  The Empire Becomes the Galactic Empire, Becomes the Rebel Alliance, Becomes the New Republic, Becomes the First Order, Becomes the Resistance—A Change in Ownership and Its Impact on Taxpayer Property Records
Bob Schweihs, a managing director of our firm, and Liza Vance, a principal in the property tax department of The Walt Disney Company, delivered this presentation to the 43rd Annual Conference of the Institute for Professionals in Taxation. The conference was held in Vancouver, BC, June 24-27, 2019.
Bob and Liza’s presentation discuss the steps to take to successfully transition, for property tax purposes, a corporation in an acquisition. They identify and address common personal property issues such as obtaining, auditing, and correcting the target company’s personal property list. Bob and Liza explore transaction pricing and structuring issues as well as standards of value and premises of value in post-acquisition valuations.

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  “Forensic Analyst Expert Report and Expert Testimony Guidelines”
By Robert Reilly, a managing director of our firm, published in the June/July 2019 issue of Financial Valuation and Litigation Expert.
Forensic analysts may be retained to provide consulting or testifying expert services related to business valuation, damages analysis, transfer price analysis, forensic accounting, and other issues. Robert’s article focuses on the analyst’s role as a testifying expert in a bankruptcy litigation matter. The article provides summarizes what the analyst should know about the standards and govern the admissibility of expert reports and expert testimony in bankruptcy court.

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  “The Independent Investor Test for Reasonableness of Shareholder/Employee Compensation in Family Law Disputes: Parts I and II”
By Robert Reilly, a managing director of our firm, published in the Spring 2019 issue of the American Journal of Family Law.
Controversies regarding the reasonableness of owner/employee compensation often arise in family law matters. In Part I, Robert looks at what reasonable compensation is. The article goes on to discuss relative court cases that have addressed reasonable compensation. In particular, Robert discusses the H.W. Johnson v. Commissioner case. He also discusses the five factors that should be considered when determining reasonableness. These factors were first discussed in Elliotts v. Commissioner. Robert’s article explores the independent investor test method of determining reasonableness of compensation. In Part II, Robert explores the Brinks Gilson & Lione v. Commissioner case. This case involved application of the independent investor test. Although these cases are Tax Court cases, the issues explored in them are pertinent to family law cases as well.

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  “What Legal Counsel Needs to Know About Forensic Analysis Due Diligence Procedures”
By Robert Reilly, a managing director of our firm, published in the June 2019 issue of The Practical Lawyer.
Lawyers are often involved in litigation that involves valuation, damages, or other economic analyses. In such matters, lawyers may retain a forensic analyst to assist with the forensic investigation. Robert’s article discusses the procedures that analysts may perform during the due diligence stage of a forensic investigation. The article examines the due diligence management interview process, and it includes a list of questions to ask during the forensic due diligence investigation.
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  “Practical Guidance Related to Forensic Analysis Due Diligence Interviews”
By Robert Reilly, a managing director of our firm, published in the April/May 2019 issue of Financial Valuation and Litigation Expert.
Valuation analysts are often asked to perform valuation, damages, transfer price, and related economic analyses within a litigation environment. In such cases, analysts may be asked to assist with a forensic investigation. Robert’s article discusses the procedures that analysts may perform during the due diligence stage of a forensic investigation. The article includes a checklist of topics to consider during the forensic due diligence investigation.
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  “Valuation of Preferred Equity Interests in Estate Planning: A Review of Characteristics That Drive Value”
By Tim Meinhart, a managing director in our Chicago office, published in the February 2019 issue of Trusts & Estates.
Preferred equity interests have been used for some time to accomplish certain estate-planning objectives. Tim’s article examines the basic preferred equity interest characteristics that drive value. The article discusses procedures used to value preferred interests. It also explores guidance from the IRS related to the valuation or preferred interests. Finally, Tim examines the current interest rate environment for preferred equity interests.
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  “Goodwill Valuation Considerations Involving Private Companies and Professional Practices”
By Robert Reilly, a managing director of our firm, published in the February/March 2019 issue of Financial Valuation and Litigation Expert.
The valuation of goodwill is a common issue in family law cases. Robert’s article summarizes many of the analyst’s considerations in the valuation of goodwill in a family law context. He discusses the generally accepted approaches and methods for valuing goodwill. Robert also explores differences between personal goodwill and professional (or institutional) goodwill.
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  “What Lawyers Need to Know about the Asset-Based Approach to Business Valuation”
By Robert Reilly, a managing director of our firm, published in the October and December 2018 issues of The Practical Lawyer.
Analysts typically apply several generally accepted business valuation approaches and methods to value a business or business interest. One of these approaches is the asset-based approach. This approach is the least understood and applied by many analysts. Robert explores situations where the asset-based approach may be appropriate. He discusses the issues of goodwill and economic obsolescence within this approach. Robert examines the use of this approach for valuations in both a going-concern premise of value and a liquidation premise of value. An illustrative example of this approach is included in the article.
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  “Using the Cost Approach to Value Internally Developed Computer Software for Property Tax Purposes”
By Connor Thurman, an associate with our firm, published in the September 2018 issues of Journal of Multistate Taxation and Incentives, a Thomson Reuters publication.
Taxpayers in jurisdictions that tax only tangible property should ensure the value of internally developed computer software is excluded from the value of assets subject to property taxation. Connor’s article focuses on generally accepted methods that valuation analysts may use to value internally developed computer software for property tax purposes. In particular, Connor examines the cost approach, replacement cost new less depreciation (RCNLD) method. He explores two models commonly used to value software: the COCOMO model and the SLIM model. Finally, he presents an illustrative example of the application of the cost approach, RCNLD method to valuing software.
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  An Update on 50 Year’s Worth of Valuation Issues: On Fair Market Value for Business and Other Interests
Curtis Kimball, a managing director in our Atlanta office and head of our wealth management valuation services practice, delivered this presentation to the Estate Planning Council of St. Louis on October 22, 2018.
Curt’s presentation reviews various valuation issues that have been considered in the courts over the years. These issues include valuation of pass-through entities, buy-sell agreements, the impact of subsequent events on valuation, and valuation of intra-family notes. Curt discusses various federal and state court decisions, including decisions from U.S. Tax Court and the Delaware Chancery Court.
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  Beyond Powel—Examining the Important Provisions of Operating Agreements and Shareholder Agreements
Weston Kirk, a manager in our Atlanta office, participated in a panel discussion on this topic at the American Bar Association Fall Tax Meeting. The meeting was held in Atlanta on October 18, 2018
Weston and the other panel members explored the important provisions of operating agreements and shareholder agreements. Weston’s presentation begins by examining the issue of defining “value” in an ownership agreement. Important considerations include the standard of value, premise of value, and level of ownership (control issues). Weston goes on to discuss various issues involved in the valuation process.
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  Asset-Based Approach to Business Valuation
Robert Reilly, a managing director of our firm, delivered this presentation to the 2018 Forensic & Valuation Services Conference, sponsored by the American Institute of Certified Public Accountants. The conference was held in Atlanta, November 5-7, 2018.
Robert’s presentation reviews reasons to use the asset-based approach and strengths and weaknesses of the approach. He discusses and provides an illustrative example of the various methods within this approach, including the asset accumulation method and the adjusted net asset value method.
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  “The Asset-Based Business Valuation Approach: Advanced Applications” (Parts 1 and 2)
By Robert Reilly, a managing director of our firm, published in the July and August 2018 issues of Practical Tax Strategies.
Legal counsel often retain and rely on valuation analysts to estimate the value of a business, business ownership interest, or securities involved in litigation. Analysts typically apply one or more generally accepted approaches to valuing such interests. This two-part article focuses on one such approach—the asset-based approach. This approach is often misunderstood by inexperienced analysts and by parties who rely on valuations. In part 1, Robert examines the consensus positions regarding this approach. He explores when to apply the asset-based approach and discusses the topics of goodwill and economic obsolescence. In part 2 of this article, Robert discusses the topics of the future sale of entity assets, holding period costs and selling expenses, and income tax liability. Finally, Robert provides illustrative examples of going concern value and liquidation value valuation analyses.
Part 1
part 2

  Valuation Court Case Update for 2017-2018
Curtis Kimball, a managing director in our Atlanta office and head of our wealth management valuation services practice, delivered this presentation to the 43rd annual conference of the National Trust Closely Held Business Association. The conference was held in Cleveland, Ohio, September 17-18, 2018.
Curt’s presentation reviews various valuation issues that have been considered in the courts in recent years. These issues include valuation of family holding companies, valuation of split-dollar life insurance contract advances, and the valuation of pass-through entities. Curt discusses various recent federal and state court decisions.
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  “What Lawyers Need to Know about the Asset-Based Approach to Business Valuation (Part 1)”
By Robert Reilly, a managing director of our firm, published in the October 2018 issue of The Practical Lawyer.
Legal counsel often retain and rely on valuation analysts to estimate the value of a business, business ownership interest, or securities involved in litigation. Analysts typically apply one or more generally accepted approaches to valuing such interests. This article focuses on one such approach—the asset-based approach. Robert examines the use of this approach in the context of both a going-concern-basis valuation and a liquidation-basis valuation
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  “Using the Cost Approach to Value Internally Developed Computer Software for Property Tax Purposes”
By Connor Thurman, an associate in our Portland office, published in the September 2018 issue of the Journal of Multistate Taxation and Incentives, a Thomson Reuters publication.
Connor discusses on generally accepted methods that valuation analysts may use to value internally developed software for property tax purposes. Connor focuses in particular on the cost approach and the replacement cost new less depreciation method for valuing computer software.
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  “Overview of the But-for Investment Portfolio to Measure Trustee Breach of Fiduciary Duty Damages”
By Kyle Wishing, a manager in our Atlanta office, and Nicholas Henriquez, an associate in our Atlanta office, published in the June/July 2018 issue of the Financial Valuation and Litigation Expert.
Kyle and Nicholas provide historical precedence for the but-for investment portfolio. They summarize common allegations in breach of fiduciary duty disputes. And, Kyle and Nicholas examine the construction of the buy-for investment portfolio and explore the accompanying complexities in the construction of such a portfolio.
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  “Intellectual Property Valuations for License and Other Transfer Purposes” Part 2
By Robert Reilly, a managing director of our firm, and Casey Karlsen, an associate in our Portland office, published in the September 2018 issue of les Nouvelles.
In part 2 of this article, Robert provides an illustrative example of an intellectual property valuation using license agreement databases to help estimate an arm’s-length royalty rate. Robert’s article may be viewed at the link below.
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  15 Differences between Unit Valuations, Summation Valuations, and Business Valuations
Robert F. Reilly, a managing director of our firm, delivered this presentation to the 48th Annual Taxation Conference: Appraisal for Ad Valorem Taxation of Communications, Energy, and Transportation Properties. The conference was held in Wichita on July 29-August 2, 2018.
Robert’s presentation considers both the conceptual and the practical differences among these three different (but related) types of valuation analyses. He reviews the different bundles of ownership interests in each type of analysis. Robert explores application of the three generally accepted valuation methods within each type of analysis. He reviews common misconceptions about unit principle valuation analyses.
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  Valuation and Extraction of Intangible Assets from a Legal and Valuation Perspective
John C. Ramirez, a vice president of our firm, and David J. Crapo, Esq., a partner with Crapo Deeds PLLC, delivered this presentation to the 48th Annual Taxation Conference: Appraisal for Ad Valorem Taxation of Communications, Energy, and Transportation Properties. The conference was held in Wichita on July 29-August 2, 2018.
John and David review the identification and extraction of intangible asset value in the application of the unit principle valuation analysis. They focus on the legal and valuation definitions of intangible assets, legal precedent and areas of continuing controversy involving the extraction of intangible assets from unit valuations, and the generally accepted valuation methods used to identify and extract intangible asset value.
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  “Intellectual Property Valuations for License and Other Transfer Purposes” Part 1
By Robert Reilly, a managing director of our firm, and Casey Karlsen, an associate in our Portland office, published in the June 2018 issue of les Nouvelles.
Robert focuses on what analysts need to know about intellectual property (IP) valuation for licensing, transfer, financing, or taxation purposes. After a brief summary of the types of IP and generally accepted methods for valuing IP, he focuses particularly on the market approach to IP valuation and, specifically, on the relief from royalty method. Robert’s article may be viewed at the link below.
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  “Valuation of Intangible Assets in Family Law Cases: Part 1 of III”
By Robert Reilly, a managing director of our firm, published in the Summer 2018 issue of the American Journal of Family Law.
Robert’s three-part article discusses the valuation of intangible assets for family law purposes. Under certain circumstances, intangible assets are valued and recorded for US GAAP compliance purposes. In Part I, Robert summarizes the generally accepted procedures used to value identifiable intangible assets for GAAP financial reporting purposes. He goes on to explore how those procedures may inform marital parties, family law counsel, and valuation analysts who have to recognize and value intangible assets as part of a family law matter.
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  “An Arm’s Length Approach to Trademark Royalty Rates”
By John Ramirez, a vice president in our Portland office, and Casey Karlsen, an associate in our Portland office, published in the February/March 2018 issue of World Trademark Review.
John and Casey’s article summarizes the regulations for transfer pricing for federal income tax purposes and describes the intangible property intercompany transfer price methods that can be used to evaluate whether transactions between members of controlled groups satisfy the arm’s-length standard. They offer insight into factors to consider when estimating trademark royalty rates for intercompany transfer price analyses. In particular, they focus on comparability factors for selecting market-based transactional data.
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  “Fair Value Not Based on the Merger Price—Parts I and II”
By Kevin Zanni, a director in our Chicago office, published in the May 2, 2018, and May 9, 2018, issues of QuickRead. Reproduced with permission from the QuickRead, published by the National Association of Certified Valuators and Analysts®, www.QuickReadBuzz.com. All rights reserved.
Kevin’s article focuses on the SWS Group case and on the interplay between merger price and fair value. The decision in this case highlights the risk of an arbitrage appraisal strategy. The decision also highlights how valuation analysts can sometimes arrive at quite divergent opinions of value. There is concern that the Delaware Chancery Court may view analysts as advocates for their clients rather than advocates for their independent valuation opinion.
Part 1
part 2

  “The Independent Investor Test for Reasonableness of Shareholder/Employee Compensation in Tax Controversies”
By Robert Reilly, a managing director of our firm, published in the Spring 2018, issue of The Practical Tax Lawyer.
Controversies regarding the reasonableness of shareholder/employee compensation may arrive in many different contexts, including income tax matters, ESOP/ERISA matters, and transactions, to name a few. Robert reviews various methods for estimating reasonable compensation. He focuses on one method: the independent investor test and reviews a recent judicial decision that involved this method.
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  “Reasonableness of Compensation Guidance for Construction Industry Taxpayers”
By Robert Reilly, a managing director of our firm, published in the January/February 2018, issue of Construction Accounting and Taxation.
Robert focuses this article on the U.S. Tax Court decision in H.W. Johnson, Inc. v. Commissioner, which was a taxpayer-friendly judicial decision. This case involved payments to shareholder/employees and whether they were reasonable compensation and the deductibility of related-party payments. The case illustrates the importance of documentation of the actual relevant facts and circumstances. Good documentation may help the taxpayer win the day with regard to the tax deductibility of (1) shareholder/employee compensation and (2) related-party payments.
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  “The Fair Value Valuation of Intangible Assets for Acquisition Accounting Controversy Purposes—Parts 1 through 3”
By Robert Reilly, a managing director of our firm, published in the October/November 2017, December 2017/January 2018, and February/March 2018, issues of Financial Valuation and Litigation Expert.
Robert’s article focuses on regulatory challenges and shareholder/investor claims with regard to the acquirer’s application of ASC business combination accounting. In particular, this article explores the acquisition accounting provisions related to identifiable intangible assets. Robert begins by examining what qualifies as an intangible asset. He examines the factors that affect the fair value of acquired intangible assets. In part 2, Robert presents illustrative examples of the income and cost approaches to the valuation of intangible assets. Part 3 contains an illustrative example of the market approach to valuing intangible assets.
Part 1
part 2reilly_fair_value_part2_fvle_2018.pdf
part 3

  “Intellectual Property Analysis as Part of a Property Tax Unit Principle Valuation”
By Robert Reilly, a managing director of our firm, and Casey Karlsen, an associate of our firm, published in the March/April 2018, issue of Journal of Multistate Taxation and Incentives.
Robert and Casey’s article focuses on the market approach to the valuation of intellectual property—in particular on the relief from royalty method. This method is commonly used to value intellectual property. The method is particularly applicable to the valuation of intellectual property that should be subtracted from the total unit value in order to conclude the valuation of taxpayer real estate and tangible personal property subject to property taxation. An illustrative example is provided. See More

  “Transferring Closely Held Company Equity to a Key Employee—Parts I and II”
By Robert Reilly, a managing director of our firm, published in the March 14, 2018, and March 21, 2018, issues of QuickRead. Reproduced with permission from the QuickRead, published by the National Association of Certified Valuators and Analysts®, www.QuickReadBuzz.com. All rights reserved.
Owners of closely held companies often must consider numerous issues with regard to the compensation of key employees. Robert’s article considers some of the options available to closely held company owners who want to provide equity (or quasi-equity) ownership to a key employee. Robert uses an illustrative example with a hypothetical fact set to illustrate the considerations involved in this decision. In Part II of the article, Robert explores the alternative structures for transferring equity. These equity transfer structures may include issuing phantom stock, granting stock appreciation rights, or creating a partnership, to name a few.
Part 1
part 2

  “Differences between Business Valuations, Unit Valuations, and Summation Valuations in the Construction Industry – Parts 1 and 2””
By Robert Reilly, a managing director of our firm, published in the July/August 2017 and September/October 2017 issues of Construction Accounting and Taxation.
Part 1 of Robert’s article discusses the conceptual and practical differences between the use of a unit valuation principle to value complex industrial and commercial properties and the use of the summation valuation principle to value more simple industrial and commercial properties. The article summarizes the procedural difference between the unit principle and the summation principle. In Part II of the article, Robert explores the analytical differences among business valuations, unit valuations, and summation valuations.
Part 1
part 2

  “The Fair Value Valuation of Intangible Assets for Acquisition Accounting Controversy Purposes – Parts 1-3”
By Robert Reilly, a managing director of our firm, published in the October/November 2017, December 2017/January 2018, and February/March 2018 issues of Financial Valuation and Litigation Expert.
In part 1 of Robert’s article, he focus on the intangible asset valuation practical guidance that valuation analysts can extract from the acquisition accounting GAAP. Robert summarizes guidance found in ASC 805 and ASC 820. In particular, he discusses categories of intangible assets, data gathering and due diligence, intangible asset valuation approaches and methods, and tax amortization benefit adjustments. In part 2 of the article, Robert provides illustrative examples of the income approach and cost approach valuation approaches. In part 3, Robert provides an illustrative example of the market approach and reviews some common sources of royalty rate data.
Part 1
part 2
part 3

  “Valuation of a Family Business Interest”
By Curtis Kimball, a managing director in our Atlanta office, along with Keri Brown, a partner at Baker Botts L.L.P., published in the December 2017 issue of Estate Planning Course Materials Journal. Reprinted with permission from the December 2017 issue of ALI-CLE’s Estate Planning Course Materials Journal.
Curtis and Keri discuss the valuation analyst’s role and the attorney’s role in valuations for estate planning purposes. They summarize the importance of a credible valuation report. Curtis and Keri provide a handy list of questions to ask when hiring a valuation analyst and discuss some basic estate and gift tax valuation terms. They explore the accuracy-related penalties that may be imposed upon valuation analysts by the IRS. Finally, Curtis and Keri provide a sample professional services agreement. See More

  “Intangible Asset Valuations for Federal Taxation Purposes”
By Robert Reilly, a managing director of our firm, published in the November 2017 issue of Practical Tax Strategies.
Robert’s article focuses on the intangible asset valuation practical guidance that valuation analysts can extract from the acquisition accounting GAAP. Robert summarizes guidance found in ASC 805 and ASC 820. In particular, he discusses categories of intangible assets, data gathering and due diligence, intangible asset valuation approaches and methods, tax amortization benefit adjustments. Robert also provides illustrative examples of the three generally accepted valuation approaches. See More

  “Unit, Summation, and Business Value in Property Tax Valuations”
By Robert Reilly, a managing director of our firm, published in the September 2017 issue of Practical Tax Strategies.
Although the differences between unit value, summation value, and business value are subtle, the distinction is important. This is because each one values a different bundle of taxpayer interests. Robert discusses 14 important analytical differences as they relate to valuations performed for ad valorem property tax purposes. See More

  “The Application of Guideline Publicly Traded Company Risk Adjustment”
By Kevin Zanni, a director in our Chicago office, published in the November 15, 2017, issue of QuickRead. Reproduced with permission from the QuickRead, November 15, 2017, published by the National Association of Certified Valuators and Analysts®, www.QuickReadBuzz.com. All rights reserved.
Using a recent Department of Justice investigation into a government contractor as an example, Kevin’s article summarizes one method that a valuation analyst may consider in order to quantify the effect that a significant negative event may have on a company’s stock value. Kevin reviews the company operations at the time of the valuation and identifies and summarizes the unique problem at issue. He presents several possible solutions for addressing the effect that the unique problem had on the company stock valuation. Finally, Kevin examines one possible valuation solution and describes the implementation of that solution. See More

  “Reasonableness of Shareholder/Executive Compensation”
By Casey Karlsen, an associate in our Portland office, and Lisa Tran, a manager in our Portland office, published in the November 8, 2017, issue of QuickRead. Reproduced with permission from the QuickRead, November 8, 2017, published by the National Association of Certified Valuators and Analysts®, www.QuickReadBuzz.com. All rights reserved.
Casey and Lisa’s article summarizes the federal income tax regulations and judicial precedent related to shareholder/executive compensation. The article includes a list of frequently relied upon data sources for estimating reasonable executive compensation. It also reviews several issues that were discussed in recent judicial decisions regarding shareholder/executive compensation. See More

  Intellectual Property Valuation Application of the Relief from Royalty Method
Robert F. Reilly, a managing director of our firm, delivered this presentation to the Advanced Business Valuation Conference of the American Society of Appraisers. The conference was held in Houston on October 7-10, 2017.
Robert described the four types of intellectual property. He examined use of royalty rate data in intellectual property analyses and data sources for such royalty rates. Robert discussed the purpose of making royalty rate normalization adjustments. Robert also provided an illustrative example of the relief from royalty method. See More

 
  Intangible Asset Valuations for Controversy Purposes
Bob Schweihs, a managing director of our firm, delivered this presentation to the Business Valuation Conference sponsored by the Indiana Society of CPAs. The conference was held in Indianapolis on October 25, 2017.
Bob discussed the various types of intangible assets and intellectual property. He explored the generally accepted approaches and methods for valuing intangible assets. He also discussed damages measurement methods for intangible assets. Bob discussed the differences between business valuation and intangible asset valuation. See More

 
  Identification and Valuation of Acquired Intangible Assets for Financial Statement Reporting Purposes
Bob Schweihs, a managing director of our firm, delivered this presentation to the Business Valuation Conference sponsored by the Indiana Society of CPAs. The conference was held in Indianapolis on October 25, 2017.
Bob discussed the identification of of intangible assets. He explored procedures for gathering data and performing due diligence. He discussed the generally accepted approaches and methods for valuing intangible assets. Bob provided examples of the cost approach, market approach and income approach for valuing intangible assets. See More

  “The Value of a Business is Not Always What it Seems (Part I of II)”
By Sam Nicholls, vice president in our Atlanta office, published in the August 30, 2017, issue of QuickRead. Reproduced with permission from the QuickRead, August 30, 2017, published by the National Association of Certified Valuators and Analysts®, www.QuickReadBuzz.com. All rights reserved.
Personal goodwill is taxed at the individual capital gains tax rate, not the higher corporate income tax rate. Therefore, a credible personal goodwill calculation can amount to significant tax savings. One that is not adequately defensible invites risk of an audit. Every personal goodwill calculation is unique to each business, and the management interview is crucial. In this first of a two-part article, the author discusses when goodwill may need to be calculated and answers whether goodwill is only present if a key employee is irreplaceable and/or a revenue generator. See More

 Identification and Valuation of Acquired Intangible Assets for ASC 805 Business Combination Purposes
Robert F. Reilly, a managing director of our firm, delivered this presentation to the American Institute of Certified Public Accountants National Advanced Accounting and Auditing Technical Symposium. The symposium was held in Las Vegas on June 13, 2017.
Robert’s presentation explored the identification of intangible assets, due diligence and data gathering procedures, generally accepted intangible asset valuation approaches and methods, and valuation synthesis and conclusion procedures. He provided illustrative examples of the three generally accepted intangible asset valuation approaches. See More

  Market Approach Methods: Extracting Pricing Data from Market Evidence
John Ramirez, a vice president with our firm, and Casey Karlsen, an associate with our firm, delivered this presentation to the 47th Annual Taxation Conference: Appraisal for Ad Valorem Taxation of Communications, Energy, and Transportation Properties. This conference was held in Wichita, Kansas, July 23-27, 2017.
John and Casey provided an introduction to the stock and debt method of valuation and the guideline sale transaction method of valuation. They explored data sources for identifying guideline companies and guideline transactions and discussed the strengths and weaknesses of each source. They also discussed comparability criteria for selecting guideline companies and guideline transactions. See More

  “Extracting Relevant Pricing Data from Market-Based Evidence”
By John Ramirez, vice president in our Portland office, and Casey Karlsen, associate in our Portland office, published in the September 2017 issue of the Journal of Multistate Taxation and Incentives.
Valuation analysts often rely on market evidence in order to estimate the value of a taxpayer's industrial or commercial property for ad valorem property tax purposes. John and Casey explore common uses of market evidence in each of the three generally accepted property valuation approaches. They examine relevant comparability factors for analysts to consider when extracting pricing data from market-based evidence. See More

  “Calculation Engagement v. Valuation Engagement in Marital Dissolution: Insight from a Valuation Analyst”
By Justin Nielsen, vice president in our Portland office, published in the March/April 2017 issue of the San Diego Lawyer.
Justin explores the two types of valuation engagements that are included in the AICPA Statement on Standards for Valuation Services (SSVS) VS100: (1) a calculation engagement and (2) a valuation engagement. Justin discusses several scenarios in which these two types of engagements may be employed. He briefly reviews the differences between the two levels of engagements. See More

  “Compensation Adjustments in Business Valuations for Family Law Disputes”
By Scott Miller, vice president in our Portland office, and Charlene Blalock, senior research analyst in our Portland office, published in the Spring 2017 issue of the American Journal of Family Law.
Scott and Charlene discuss factors to consider when determining whether compensation is reasonable. They examine the issue of “double dipping” (using the same compensation to determine spousal support and to determine the property division). Scott and Charlene review several marital dissolution judicial decisions related to compensation. They summarize methods for adjusting for excess or insufficient compensation in a valuation. Finally, they provide sources of compensation data. See More

  “Construction Company Valuation—The Asset Accumulation Method”
By Robert F. Reilly, firm managing director, published in the January/February 2017, issue of the Construction Accounting and Taxation.
Robert’s article describes and illustrates one of the two common asset-based approach valuation methods: the asset accumulation method. Robert explores the procedures used in this method. He discusses the various categories of assets and liabilities that may be analyzed in this method (e.g., intangible personal property and contingent liabilities). He also provides an illustrative example of the method. See More

  “Methodologies for Arriving at DLOM”
By Robert F. Reilly, firm managing director, published in the April 2017, issue of the American Bankruptcy Institute Journal.
Robert’s article summarizes the factors to consider in measuring the discount for lack of marketability (DLOM) associated with noncontrolling securities of a closely held company. Robert discusses the two types of models used to measure the DLOM: empirical models and theoretical models. See More

  "The Asset-Based Approach to Business Valuation, Part 1”
By Robert F. Reilly, firm managing director, published in the February/March 2017 issue of the Financial Valuation Litigation Expert.
Robert discusses the various situations where it may be appropriate to use an asset-based approach in the valuation of a closely held company. Robert examines the theory of this approach. He also discusses reasons why this approach is not used more often. See More

  "Discount for Lack of Marketability for a Closely Held Debtor Company”
By Robert F. Reilly, firm managing director, published in the February 2017 issue of the ABI Journal, a publication of the American Bankruptcy Institute.
Robert discusses the empirical and theoretical models that analysts may use to estimate the discount for lack of marketability (DLOM). He explores the application of the DLOM to a debtor company valuation. Robert also discusses factors that may be considered in the selection of the appropriate DLOM to apply. See More

  "DLOM for a Controlling Ownership of a Closely Held Company”
By Robert F. Reilly, firm managing director, published in the Winter 2017 issue of the American Journal of Family Law.
In many marital dissolution cases, an analyst may be asked to value a controlling ownership interest in a closely held company. In some cases, a discount for lack of marketability (DLOM) is appropriate. Robert discusses the factors that an analyst typically considers when measuring a DLOM to apply in the valuation of a controlling ownership interest. See More

  “Analyst Considerations of a Taxable Stock Purchase M&A Structure”
By Robert F. Reilly, firm managing director, published in the November 2016 issue of QuickRead, a publication of the National Association of Certified Valuators and Analysts.
Robert’s article summarizes some of the tax benefits—and the tax complexities—associated with a taxable stock purchase acquisition structure. Although analysts are not expected to be transaction income tax advisors, analysts opining on deal price fairness to any deal participants should be generally aware of these transaction structure considerations.

  Intangible Asset Valuation: Cost Approach Valuation Methods and Procedures
Robert F. Reilly, a managing director of our firm, delivered a webinar for the National Association of Certified Valuators and Analysts Consultants’ Training Institute. Robert’s webinar was held on November 11, 2016.
Robert discusses the generally accepted intangible asset valuation approaches and methods. He then explores considerations related to the cost approach. Robert provides an illustrative example of the cost approach. Finally, Robert reviews intangible asset valuation report considerations. See More

  Valuation of Businesses, Securities, and Intangible Assets for Bankruptcy Purposes
Robert F. Reilly, a managing director of our firm, delivered a webinar for the National Association of Certified Valuators and Analysts Consultants’ Training Institute. Robert’s webinar was held on November 7, 2016.
Robert discusses the common reasons for conducting a bankruptcy valuation. He explores analytical issues that practitioners face in performing bankruptcy valuations. Finally, Robert reviews caveats for valuation analysts performing bankruptcy valuations. See More

  “Considerations of a Taxable Stock Purchase Acquisition Structure”
By Robert F. Reilly, firm managing director, published in the October 2016 issue of Transaction Advisors.
Robert’s article summarizes some of the tax benefits—and the tax complexities—associated with a taxable stock purchase acquisition structure. For illustrative purposes, Robert analyzes a hypothetical transaction involving the acquisition of a C corporation by an LLC. Subscribers can access Robert’s article here. See More

  "Consider the Asset-Based Approach in the Construction Company Valuation”
By Robert F. Reilly, firm managing director, published in the September/October 2016 issue of the Construction Accounting and Taxation.
Robert discusses various reasons why this approach is used less often than the income and market approaches for construction company valuations. He examines the theory of the asset-based approach. He then discusses situations where it may be appropriate use of the approach. Robert also explores the treatment of income taxes within the approach. See More

  The Benefits of Professional Standards to CA Valuation Specialists?
Robert F. Reilly, a managing director of our firm, delivered a presentation to the Business Valuation and Forensic Accounting Conference, which was held September 12-14, 2016, in Melbourne, Australia. The conference was sponsored by the Chartered Accountants of Australia and New Zealand.
Robert presented an overview of the development of standards in the United States. He explored the difference between transactional valuations and notational valuations and discussed the various types of valuation services. Robert also reviewed the differences and similarities between U.S. and Australian/New Zealand standards. See More

  Intangible Asset Valuation Approaches, Methods, and Procedures
Robert F. Reilly, a managing director of our firm, presented a workshop at the Business Valuation and Forensic Accounting Conference, which was held September 12-14, 2016, in Melbourne, Australia. The conference was sponsored by the Chartered Accountants of Australia and New Zealand.
Robert’s workshop explored the identification of various types of intangible assets and intellectual property. He reviewed data gathering and due diligence procedures. Robert explored the cost approach, income approach, and market approach to intangible asset valuation and presented an illustrative example of each method. See More

  "12 Reasons to Value IP”
By Robert F. Reilly, firm managing director, published in the September 2016 issue of the ABI Journal, a publication of the American Bankruptcy Institute.
Robert focuses on the valuation of debtor company intellectual property (IP) within a bankruptcy proceeding. He discusses the various types of debtor company IP that analysts are asked to value within a bankruptcy controversy context. He also discusses the various reasons that an IP valuation is needed in this context. See More

  Intangible Asset Valuations for Controversy Purposes
Robert Schweihs, a managing director of our firm, delivered a presentation to the Kentucky Society of CPAs Business Valuation and Litigation Conference, which was held on August 12, 2016, in Louisville, Kentucky.
Bob discussed various types of intangible asset analyses. He reviewed the generally accepted intangible asset valuation approaches and methods. Bob explored the differences between a business valuation and an intangible asset valuation. Finally, he discussed intangible asset damages measurement methods and considerations. See More

  Income Approach Issues in Valuations Prepared for Property Tax Purposes
Aaron Rotkowski, a vice president of our firm and the leader of our property tax valuation practice, delivered a presentation to the Institute for Professionals in Taxation Northwest Regional Property Tax Seminar, which was held on August 4, 2016, in Hillsboro, Oregon.
Aaron discussed issues related to the valuation of intangible assets using the income approach. These issues include estimating a supportable long-term growth rate, assessing the reasonableness of market data in the income approach, assessing the reasonableness of normalized depreciation expense and capital expenditures, and the internal consistency of assumptions. See More

  "Discount for Lack of Marketability in the Closely Held Security Valuation”
By Robert F. Reilly, firm managing director, published in the July/August 2016 issue of the Construction Accounting and Taxation.
Robert discusses the various factors that an analyst may consider in the measurement of a discount for lack of marketability (DLOM) associated with noncontrolling interests in closely held construction companies. He also explores various empirical models for measuring the DLOM.

  Valuation: Beyond the Basics—The Five Marketability Forces and the IRS Job Aid on S Corporations
Fady Bebawy, a vice president in our Chicago office, delivered a presentation to the American College of Trust and Estate Counsel 2016 Ohio Fellows Meeting, which was held April 15-17, 2016.
Fady reviewed considerations in the estimation of the discount for lack of marketability (DLOM). He discussed the five marketability forces and how they related to the DLOM. Fady also explored the recent IRS Job Aid on S Corporations. Finally, he considered the issue of tax-affecting versus not tax-affecting. See More

  Economic Obsolescence and Market Value
Aaron Rotkowski, a vice president of our firm and the leader of our property tax valuation practice, co-delivered a presentation to the 46th Annual Taxation Conference: Appraisal for Ad Valorem Taxation of Communications, Energy and Transportation Properties, which was held in Wichita July 24-28, 2016. Aaron’s co-presenter was Michael Mangan or Tonkon Torp.
Aaron and Michael focused their presentation on the consideration of economic obsolescence within the cost approach to unit valuation for ad valorem taxation purposes. Topics included factors that contribute to economic obsolescence, appropriate methods for the estimation of economic obsolescence, and proper application of the obsolescence quantification methods. They examined the effect of economic obsolescence on the valuation of businesses for ad valorem taxation purposes. See More

  Building a Cap Rate Study: How Could Anything Go Wrong?
Robert F. Reilly, a managing director of our firm, co-delivered a presentation to the 46th Annual Taxation Conference: Appraisal for Ad Valorem Taxation of Communications, Energy and Transportation Properties, which was held in Wichita July 24-28, 2016. Robert’s co-presenter was Keith Fuqua of Colonial Pipeline Company.
Robert and Keith presented an overview of the process of developing a unit valuation capitalization rate study. They examined the procedures involved in such a study. Such procedures include consideration of the objective of the valuation analysis, development of the appropriate capital structure, development of the cost of debt rate, development of the cost of equity rate, and arriving at the final capitalization rate conclusion. See More

  "Intellectual Property Market Approach Valuation Methods in Bankruptcy Controversies”
By Robert F. Reilly, firm managing director, published in the June/July 2016 issue of the Financial Valuation Litigation Expert.
Robert discusses the various types of debtor company IP that analysts are asked to value within a bankruptcy controversy context. He summarizes the generally accepted IP valuation approaches and methods. Finally, Robert describes and illustrates a common market approach valuation method to analyze debtor company IP. See More

  "The Market Approach to Valuing Intangible Assets”
By Robert F. Reilly, firm managing director, published in the May/June 2016 issue of Valuation Strategies.
Robert discusses the various methods within the market approach that may be used to value various types of intangible assets. These methods include the sales comparison method, the relief from royalty method, and the comparable profit margin method. See More

  "The CPA Valuation Analyst and the Economic Substance Doctrine”
By Robert F. Reilly, firm managing director, published in the April 2016 issue of FVS Consulting Digest, a publication of the AICPA.
The IRS has recently stepped up its challenges of what it believes to be suspect taxpayer transactions based on the so-called “economic substance doctrine.” Analysts are often called upon to perform economic substance analyses. Robert explores some key definitions for these analyses and then reviews a few recent court decisions that dealt with this issue. See More

  "Intangible Asset Valuation Process”
By Robert F. Reilly, firm managing director, published in the March/April 2016 issue of Valuation Strategies.
The valuation process provides an overall analytical framework that assists the analyst in the collection, assessment, analysis, and interpretation of market-derived valuation evidence. Robert reviews the various steps in this valuation process. Following this process may help ensure the successful completion of the intangible asset valuation assignment.

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  "Selling Employee/Shareholder Transition Period Payments after the Construction Company Acquisition”
By Robert F. Reilly, firm managing director, published in the March/April 2016 issue of Construction Accounting and Taxation.
There has been considerable consolidation in the construction industry in recent years. In the acquisition of a construction company, it is common for the company buyers to request that any individual employee/shareholder seller agree to continue to work for the acquired construction company during a specified transition period. Issues may arise as to how these selling employee/shareholders should be compensated. Robert’s article discusses the structuring of transition payments, factors to consider when characterizing the transition payments, and legal precedent for the characterization of transition period payments.

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  "Valuation of Intellectual Property in the Marital Estate” Parts 1 and 2
By Robert F. Reilly, firm managing director, published in the Winter 2016 and Spring 2016 issues of the American Journal of Family Law.
Robert explores the types of intellectual property that may be encountered in a marital estate. He discusses the due diligence procedures that should be performed in an intellectual property valuation for divorce purposes. Robert explains the generally accepted approaches and methods used to value intellectual property. He concludes with a discussion of the procedures for reaching a valuation synthesis and conclusion.
Part 1    Part 2

  "The Five Marketability Forces Framework”
By Fady F. Bebawy, a vice president of our firm in our Chicago office, published in the January 2016 issue of Trusts & Estates.
Disputes that arise from the audit of gift tax returns often involve the selection of the discount for lack of marketability (DLOM). Fady discusses customizing the selection of the DLOM. One tool that may be used is a variation of the Michael Porter’s “Five Forces.” The five forces that may be used in selecting an appropriate DLOM are supply, demand, substitutes, turnover, and competition. Fady discusses each of these forces as they relate to the DLOM.


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  "What Lawyers Need to Know about Distinguishing Personal Goodwill from Entity Goodwill in the Closely Held Company Valuation”
By Robert F. Reilly, firm managing director, published in the Winter 2016 issue of The Practical Tax Lawyer.
In many tax-related valuations, it is often important for the closely held business owners and their advisers to allocate the total enterprise value between the company-owned entity goodwill and the individual shareholder/employee’s personal goodwill. Robert’s article summarizes what counsel need to know with regard to the elements of, the separability of, and the documentation of a shareholder/employee’s personal goodwill. This article also discusses a recent Tax Court decision: Bross Trucking v. Commissioner.


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  "Valuation of Health Care Entity Transactions,” Part One
By Robert F. Reilly, firm managing director, published in the February/March 2016 issue of Financial Valuation and Litigation Expert.
Robert’s article summarizes what analysts need to know about the regulatory considerations that affect the valuation of health care entity transfers of property and services. The article also presents analyst common misconceptions related to health care entity valuations.


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  "Distinguishing Personal Goodwill from Entity Goodwill in the Closely Held Company Acquisition”
By Robert F. Reilly, firm managing director, published in the December 2015 issue of Transaction Advisors, a monthly journal available at www.transactionadvisors.com. An extensive abstract of the article is available at https://www.transactionadvisors.com/insights/distinguishing-personal-goodwill-entity-goodwill-closely-held-company-acquisitionSee More. Subscribers may access the full text of the article.
In an acquisition of a closely held company, it is often important for the business buyers and sellers to allocate the total enterprise value between the closely held company—owned entity goodwill and the individual selling shareholder/employee’s personal goodwill. Robert’s article summarizes the analyst’s considerations with regard to the elements of, the separability of, and the documentation of a selling shareholder/employee’s personal goodwill and utilizes several key Tax Court decisions as illustration.



  Representations & Warranties Insurance—The Claims Expert’s Perspective
Shawn Fox, a managing director of our firm and the leader of our economic damages analysis practice, co-delivered a presentation along with Michael Conway, litigation partner and national business litigation practice leader at Shook Hardy & Bacon L.L.P. Mr. Fox and Mr. Conway were interviewed by Casey Zgutowicz, vice president at Lockton Companies' Chicago office.
Mr. Fox discussed key considerations in calculating economic damages on indemnification claims, accounting disputes for the buyer and seller, and the role of the forensic accountant in merger and acquisition disputes. Mr. Conway discussed the legal claims involved in situations of material misrepresentations and fraudulent misrepresentation and navigating through coverage issues under a representation and warranties policy (including definition of loss, materiality, exclusions, scope of exclusions, carve-outs, and interpretation of asset purchase agreement, among others). Lockton is a leading risk management, insurance, and employee benefits consulting services firm. This presentation can be viewed using this link: https://vimeo.com/146699664



  Separating Intangible Assets from Real Property in Real Estate Appraisals
Robert Reilly, a managing director of our firm, delivered a presentation at the 2015 Forensic and Valuation Services Conference. The conference, which is sponsored by the American Institute of Certified Public Accountants, was held November 9-10, 2015, in Las Vegas.
Robert’s presentation discussed the identification of intangible assets and various reasons to value these assets. He also explored the generally accepted intangible asset valuation approaches and methods. Robert also discussed various reasons to extract intangible asset value from the overall enterprise value. Illustrative examples were provided for the direct subtraction method, the income allocation method, and the royalty rate method..


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  Differences between a Business Valuation and an Intangible Asset Valuation
Robert Reilly, a managing director of our firm, delivered another presentation at the 2015 Forensic and Valuation Services Conference. The conference, which is sponsored by the American Institute of Certified Public Accountants, was held November 9-10, 2015, in Las Vegas.
Robert’s presentation began with a discussion of the valuation purpose and objective. He then explored various types of analyses and opinions. Robert examined the generally accepted business valuation approaches as well as the generally accepted intangible asset valuation approaches. He discussed the differences in applying the income, market, and cost (or asset-based) approaches for a business valuation and an intangible asset valuation..


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  TEC Industries Current Property Tax Issues and USPAP Update
Robert Reilly, a managing director of our firm, delivered a presentation at the 2015 Advanced Annual Property Tax Seminar. The seminar, which is sponsored by the National Association of Property Tax Representatives—Transportation, Energy, Communications, was held October 27, 2015, in Savannah, Georgia.
Robert’s presentation discussed issues related to property tax professional standards. He explored the current property tax issues related to the transportation, energy, and communications industries. And, Robert discussed recent and pending changes to the Uniform Standards of Professional Appraisal Practice.


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  "Valuation of Taxpayer Companies with NOL Carryforwards”
By Robert F. Reilly, firm managing director, and Aaron M. Rotkowski, vice president and leader of our property tax valuation practice, published in the Fall 2015 issue of The Practical Tax Lawyer, a quarterly professional journal.
During the last five to ten years, many taxpayer companies have experienced operating losses, at least periodically. This discussion describes how to consider those operating losses—and the associated NOL tax attributes—in valuations performed for property tax purposes. The article defines an NOL carryforward and an NOL carryback and explores whether an NOL carryforward should be categorized as tangible property. The article then analyzes the use of the 0 percent tax rate assumption in a valuation intended to conclude a market value estimate. It considers applying an after-tax capitalization rate to a pretax income stream. The article goes on to describe the statutory limitations on the use of a NOL carryforward and the implications of incorporating an NOL carryforward in a direct capitalization method valuation. Finally, it summarizes the factors that affect the market value of an NOL carryforward.


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  Patent Valuation: Practical Applications
Robert Reilly, a managing director of our firm, delivered a presentation at the 2015 Advanced Business Valuation Conference. The conference, which is sponsored by the American Society of Appraisers, was held October 18-21, 2015, in Las Vegas.
Robert’s presentation discussed the various types of intellectual property and reasons to analyze intellectual property. He explored the various types of patents and patent-related intangible assets. Robert discussed due diligence procedures and the various databases available for researching royalty rates. Illustrative examples were provided for each of the three generally accepted patent valuation approaches: the cost approach, the market approach, and the income approach.


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  "Structuring Transition Period Payments in Closely Held Company Acquisitions”
By Robert F. Reilly, firm managing director, published in the September 2015 issue of Transaction Advisors, a monthly journal available at www.transactionadvisors.com. An extensive abstract of the article is available at https://www.transactionadvisors.com/insights/structuring-transition-period-payments-closely-held-company-acquisitions. Subscribers may access the full text of the article.
In an acquisition of a closely held company, acquirers often ask the selling employee/shareholders to continue to provide services to the company for a transition period post-sale. This is done to ensure an efficient transition of the sellers' relationships with the company's customers, suppliers, and employees. Robert’s article discusses a number of factors a transaction advisor—and the transacting parties themselves—should consider when characterizing these payments. These factors include the transition services conditions, the proportionality of the transition payments and the target company price valuation, among others.



  "Estate of Giustina v. Commissioner”
By Christopher Silvetti, an associate in our Chicago office, published in the September 23, 2015, issue of QuickRead, a publication of the National Association of Certified Valuators and Analysts.
Christopher’s article discusses the recent decision from the Ninth Circuit Court of Appeals which reversed an earlier Tax Court decision in this matter. The case has now been remanded back to Tax Court for recalculation of its valuation of a 41.128 percent interest in the Partnership.
In its opinion, the Ninth Circuit addressed the Tax Court’s use of valuation methods, the selected weightings, the selected valuation discounts, and the selected company-specific risk premium as part of an equity cost of capital calculation. To read Christopher’s article:


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  Identification, Valuation and Extraction of Exempt Intangible Personal Property
Robert Reilly, a managing director of our firm, co-delivered a two-part presentation at the 45th Annual Appraisal for Ad Valorem Taxation of Communications, Energy and Transportation Properties Conference. The conference was held June 26-30, 2015, in Wichita, Kansas. Robert’s co-presenter was Marshall Mungle.
Part 1 of Robert’s presentation was titled “Identification and Valuation of Intangible Assets.” Robert and Marshall discussed the identification of intangible assets, reasons to value intangible assets, intangible asset property tax considerations, generally accepted approaches for valuing intangible assets. They also provided illustrative examples of the three generally accepted approaches.
Part 2 of Robert’s presentation was titled “Extraction of Intangible Assets.” In this part of the presentation, Robert and Marshall discussed reasons to extract intangible asset value, basic property appraisal accumulation and extraction procedures, common exempt property extraction procedures, and methods for intangible asset extraction from the total value. They also provided illustrative examples of the direct subtraction, income allocation, and royalty rate methods.


Part 1


Part 2