BWPrice's Marketing U

Two New Articles Added

Two articles have been added to the "Complimentary Articles" section of this blog.  The first was published in June of 2008 (yep, I'm behind) and it is entitled "How to Develop & Manage a Niche."  The second was published this month and is entitled "Social Media: What Is It & Should You Care?."

Both articles are addressed to business appraisers.  Other professional advisors to business can certainly benefit as well.

They were both published in CCH's Business Valuation Alert newsletter.  Hope you enjoy them.  You can find them in the "Complimentary Articles" section of this website.

New Book: The Bank Director's Valuation Handbook

I was posting quite regularly for a while, then things dropped off to only "Happy Mondays."  Why?  Because we were in the midst of launching yet another book.  This one is entitled "The Bank Director's Valuation Handbook: What Every Director Must Know About Valuation."

Per Mercer Capital's website:

Why Is This Handbook Important?
Valuation issues intersect with a bank’s affairs more often than you may imagine, and they are likely to arise during your tenure as a director or manager. These valuation issues might include merger and acquisition activity, an employee stock ownership plan, capital planning, litigation, or financial planning, among others. Mercer Capital has been working with financial institutions for over 25 years and has provided valuation and other financial consulting services to thousands of clients. We find that most of our clients have the same basic questions about these important valuation issues. This handbook is written to address many of these questions and to provide useful information for bank directors and managers when valuation needs emerge. It is unique in that it focuses specifically on valuation-related issues, and is designed to be a ready resource rather than an academic treatise.

Who Should Read This Handbook and Why?
This handbook is written specifically for bank directors and managers. It provides basic information and insight into those circumstances that involve valuation and other financial consulting. Each chapter addresses a valuation issue that might surface at your financial institution. Meant to stand alone, the chapters summarize the key issues on which you should focus and provide insight and a vocabulary to assist you in asking the right questions of your professional advisors.

You can get your copy here.

New Article on Mercer Capital's Website : S Corporation Banks Beware

I am the marketing director for Mercer Capital, one of the leading business valuation and investment banking firms in the nation.  We have an active financial institutions practice and given the pace of change in that industry right now, we'll be commenting on certain issues important to our clients. 

Jay Wilson recently authored a short piece entitled "S Corporation Banks Beware."  Money quote:

We found additional evidence that S corporation banks may be experiencing the detrimental impact of additional capital volatility in a review of bank failures.  Of 8 total S corporation bank failures since 1998, five have occurred since January 1, 2008, with three occurring since December 1, 2008.

While it is too early to tell whether this evidence of increased transaction activity and failures among distressed S corporations is purely a coincidence or early indications of an emerging trend of capital volatility for S corporation banks, this analysis prompted a number of questions: ...

Click here to read the entire article.

Valuation Discounts and HR 436

My good friend Eva Lang aka BV Girl recently posted "Goodbye to Discounts?."  From her post:

The bill [HR 436] also contains a provision disallowing valuation discounts for transfers for interests in entities (such as LLCs and corporations) containing "nonbusiness assets." This is aimed at preventing the use of family limited partnerships and limited liability companies (which are not true operating businesses - holding marketable securities, for example) for discounted transfers to younger family members. This would eliminate a common and highly effective method for gift and estate tax reduction, but LLCs would continue to be an excellent tool for asset protection. The effective date of this portion of the Act would be the date of enactment. (North Carolina Estate Planning Blog)

We will keep you posted on the status of this bill.

New Book, Revenue Ruling 59-60 at 50, is at the printer!

One of our newest books, Revenue Ruling 59-60 at 50: Rediscover Fair Market Value is at the printer.  We are expecting delivery any day.  From the text on the back cover:

Tagging a text with the label “classic” should not be done carelessly.  But 50 years after its initial release, few would disagree that Revenue Ruling 59-60 deserves the title.  Written in the spare, unadorned style of a government publication, the Ruling is a compact storehouse of enduring practical wisdom for business appraisers and the users of appraisal reports.  

At Mercer Capital, we decided the 50th anniversary of the Ruling’s release was a fitting time to compile this book.  Having been actively appraising privately held businesses for over 25 of the 50 years since the Ruling’s issuance, we find ourselves often returning to the Ruling, whether for guidance in novel situations or simply to confirm some intuition.  In short, it is a trusted companion.  

Our purpose in writing this book is twofold: first, to offer a guided tour through the Ruling, pointing out some of the most prominent features of the landscape (and providing the occasional warning about rough terrain); second, to pull back the curtain a bit, granting a non-technical view of how appraisers (at least this group) attempt to translate the guidance found in the Ruling into actual valuation engagements.

To review the chapter list, keep reading.

New Article: "Recession, Market Meltdown Put Spotlight on Goodwill Impairment"

A new article was recently posted to Mercer Capital's website: "Recession, Market Meltdown Put Spotlight on Goodwill Impairment" by Travis W. Harms, CFA, CPA/ABV, a senior member of Mercer Capital's Financial Statement Reporting Group.  The article begins:

The sharp decline in stock market indices through the first eleven months of 2008 has shaved over $5.0 trillion off the equity market capitalization of companies in the S&P 500.  The falling market valuations reflect both a reduced appetite for risk and an expectation that corporate cash flows will be pressured as the global economy enters a recession of unknown depth and duration.

For auditors and financial statement preparers, the bear market suggests that the goodwill reported on many corporate balance sheets may be impaired.  The accounting for goodwill, the amount paid in excess of net identifiable assets in previous acquisitions, is set forth in SFAS 142, Goodwill and Intangible Assets.   SFAS 142 provides for an annual impairment test for goodwill, rather than systematic amortization as under prior guidance.  The two-step impairment test starts with a comparison of the reporting unit’s fair value to carrying value.  Impairment is indicated if the fair value of the reporting unit is less than carrying value.  Step 2 of the impairment test involves quantifying the amount of impairment by determining the implied fair value of the reporting unit’s goodwill. ...

... Regardless of a company’s regular annual testing date, SFAS 142 prescribes an interim test upon occurrence of an event or change in circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying amount.  In our practice, we are observing many audit firms that regard the sharp decline in stock prices and the general economic uncertainty to be triggering events for an interim impairment test.

To read the entire article, click here.

New Issue of Mercer Capital's E-Mail Newsletter Released

The December 2008 edition of Mercer Capital's e-mail newsletter, Value Matters (TM), features an article by Wendy S. Ingalls, CPA/ABV, CBA, ASA, titled "Consider the Alternate Valuation Date"

As of December 3, 2008, the major stock indexes were down on the order of 40% for the year.  In addition, the long-suspected recession has been officially declared.  While the depth and length of the current recession is laden with uncertainty, what is certain is that virtually no investment sector has remained unscathed.  For those dealing with an estate tax issue from within the last year, consideration of the alternate valuation date is almost certain to provide vital information for the estate tax filing process.

As part of the Economic Growth and Tax Relief Reconciliation Act of 2001, Section 2032 of the IRS Tax Code was designed to provide some measure of relief to those taxpayers negatively affected by fluctuating markets.  The alternate valuation date provides taxpayers the option to choose to use a date six months subsequent to the date of death to value an estate.

You can gain immediate access to these and other newsletters by visiting our Knowledge Center.

Engagement Risk Management for Business Valuation Professionals

Eva Lang, aka BV Girl, has a great post at AccountingWeb.com on the subject of engagement risk management.  It was prompted by a presentation by Ron Klein, a vice president-claims counsel with CAMICO Mutual Insurance Company, at the recent AICPA/ASA conference.

According to Eva, it "was an eye-opening presentation for valuation analysts who may be a bit complacent about the risk of taking on certain engagements."

Read her post which contains "10 Ways to Manage Your Risk in This Economy."

Business Valuation Newsletters

Not too long ago, I received an e-mail blast from the good folks at Business Valuation Resources about their BVNewsletter Service.  I mentioned them, along with another newsletter service provider, in my recent AICPA/ASA speech. 

To refresh your memory, I believe in sending useful content to your target market on a consistent basis.  One of the best ways to do that is via a newsletter.  Newsletters aren't a new idea. They are not "sexy" or cutting edge.  What they are is effective.  I'll take that any day.

For business valuation firms or business valuation divisions of larger CPA firms, there is good news.  According to the recent BVResources 2009 Business Valuation Firm Economics & Best Practices Survey, only about a 3rd of their respondents published a newsletter (36.8%).  Approximately 20% reported publishing an e-mail newsletter or blog, yet I suspect there is not much cross over with those who publish a print newsletter.  That means that there is an opportunity to begin a newsletter program and gain ground sooner rather than later because the market is not crowded with newsletters.

Here are the two service providers you should consider.  Note: I have no financial interest in recommending either of these service providers.  This is for your information only.

Newest Issue of Mercer Capital's Value Matters(tm)

The November 2008 edition of our e-mail newsletter, Value Matters (TM), features an article by Megan M. Bartels, titled "Grantor Retained Annuity Trusts: A Perfect Storm"

The current economic crisis will almost certainly have vast and lasting effects on our country’s businesses and financial markets alike.  Personal retirement and investment accounts have been battered.  The world of gift and estate taxation is full of uncertainty due to the scheduled repeal of estate and generation-skipping taxes set for 2010, while the inauguration of a new president in January 2009 only adds to the ambiguity about changes in legislation going forward.  Amid all the turmoil, or perhaps because of all the turmoil, we have encountered a “perfect storm” in which all the conditions are right for the success of a specific gift and estate tax planning tool, the grantor retained annuity trust (“GRAT”).

You can gain immediate access to this and other newsletters by visiting our Knowledge Center, or by subscribing here.