Business Valuations: Advanced Topics Introduction This book received the prestigious "Publication of the Year" award from the Institute of Business Appraisers (IBA) in recognition of its contribution to the business appraisal profession. I wrote Business Valuations: Advanced Topics because I was frustrated by the lack of objectivity in most of the valuations I saw and the research I found. Most authors simply explained their conclusions as "based upon my experience." If there is no theory or verifiable data, the valuation is simply a guess. My book examines financial theory and the empirical evidence that either supports or refutes conventional, prevailing wisdom for valuing privately held companies. Read on to see what’s in the book and how you may order it. Business Valuations: Advanced Topics Contents The preface explains the purpose of the book and its attempt to satisfy
the professional and business valuator who want to know not just the "how", but
the "why" of business valuations. General Framework for Business Valuations Revenue Ruling 59-60 is examined in light of modern financial theory and concludes that
it is still relevant for valuing privately held businesses after almost 40 years from the
date of its issue. It places expectations of future performance and risk above past
results. The Efficient Market Hypothesis The EMH is the cornerstone of modern financial theory. It can be used to examine many
aspects taken for granted in the prevailing wisdom including the application of the small
stock premium to capitalization rates, validity of market data comparisons, application of
premiums and discounts for control and minority interests, and explaining the wide
divergence in valuation experts’ opinion of value. The definition of "fair market value" is examined in light of
the many refinements provided by court decisions. It is compared to the financial theory
concept of "fair value." It is surprising how many valuations claim to portray
"fair market value" yet usually employ comparisons to market data that violate
the definition. However, the motivation of court decisions is not always consistent with
reality. The Parameters of Valuation Practice This part of the book examines modern financial theory and the empirical evidence. It
contains many mathematical proofs, generally using simple algebra. There are many insights
given that benefit the reader even if the proofs prove too tedious. The purpose of the
proofs is to demonstrate the validity of the concepts and conclusions reached and may be
skipped. The topics explored include Common Stock Valuation Models, Premiums and
Discounts, the Capital Asset Pricing Model, Estimating Betas and the Market Risk Premium
and Return, Debt-Free Valuations, Adjusting Betas for Publicly Held Companies to Derive
Private Company Betas, and Inflation and Valuation. Techniques are developed to filter
private company transaction data for better company comparisons, more valid concepts for
applying premiums and discounts, and developing discount (capitalization) rates. This chapter examines how the courts in federal tax valuations have decided such issues
as objective appraisals, fair market value, selling expenses and taxes, assemblage, swing
vote stock, attribution and aggregation. It also cites cases that support modern financial
theory in federal tax valuations. The Revenue Reconciliation Act of 1990 enacted many special rules for private business
interests in estate and gift tax valuations including the relevance of buy-sell
agreements. The result of this Act became Chapter 14 of the Internal Revenue Code. This
chapter is an in-depth examination of these code sections and their regulations. Trial Strategy and the Business Valuator Much has been written on the general subjects of expert witness testimony and
litigation support by experts. This chapter goes beyond the usual lists of
"Do’s" and "Don’ts" for the expert and explains what each
side attempts to accomplish in each step of the litigation process. Both attorneys and
experts will benefit from the insights provided from my own experience working with
attorneys and teaching many of these techniques in seminars. "Approach opposing
counsel at depositions as you would a sleeping Doberman at a junkyard—slowly and with
great respect." (Page 278) Nowhere in the field of business valuations is gamesmanship more prevalent than in
valuations for a divorce. The most unusual concepts are proposed in the name of fair
market value to achieve a desired result. This chapter examines many of the ploys used and
alerts counsel, experts, and clients to their flaws. Would it not be better if we could
agree upon the ground rules and then let the experts for each side apply them to the best
of their ability to arrive at their professional opinions of value? What Others are Saying About the Book: ". . . is worth your reading. . . We found each chapter rather unique with ideas not found in the conventional texts."—James H. Schilt, Editor, Business Valuations Review, December 1997, Page 166. "Most importantly, you have addressed the theory of what business appraisers do, and the relationship between theory and practice. Too much of the literature of business appraisal is concerned with the ‘what’ to do, without explanation of the ‘why.’ . . . I wish that all professional business appraisers would study your book."—Raymond C. Miles, Executive Director, IBA. "Business Valuations: Advanced Topics . . . fills the critical void in the valuation literature. . . between financial theory text books and the practitioner how-to books"—Grant McQueen, Associate Professor of Finance, Marriott School of Business, Brigham Young University. ". . . it is quite detailed in many of its topics and probably not recommended for the business valuation novice. Kasper presents a comprehensive discussion of the Efficient Market Hypothesis and its relationship to valuation. The litigation section is quite different from what most BV books would cover. Kasper does an excellent job in defining the valuation expert's role and purpose in the context of litigation. The math can be navigated, but we recommend readers allow plenty of time to work through both the math and Kasper's comments. However, despite the sometimes cumbersome math, this book does have something to offer even the most seasoned business valuation practitioner."—Shannon Pratt's Business Valuation Update, December 1998, page12. "The author has paid meticulous attention to derivation of the formulas and equations . . . For example, readers might find the coverage of the constant growth as well as the capitalized earnings models amd their linkage to business valuations quite impressive. . . Another important achievement of the book is its comprehensive coverage of the CAPM. The book further focuses on Chapter 14 of the Internal Revenue Code. This chapter of the book should particularly appeal to certified public accountants, attorneys, and financial professionals who specialize in estate planning.. . . The last two chapters of the book (litigation and divorce valuations-ed) should be quite useful to those professionals that practice business valuations primarily from the litigation side." —"Recent Publications," Saeed Tabriz, Ph.D., The Ohio CPA Journal, Volume 59/No. 2, April-June 2000. Both (Top) Click Here to order this book from Quorum Books and read additional reviews.
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