Litigation Valuation REPORT. Rules of thumb: Do they have a place in business valuation? When a business is being valued, consider the real estate
|
|
- Hillary Hood
- 5 years ago
- Views:
Transcription
1 November/December 2012 & Litigation Valuation REPORT Rules of thumb: Do they have a place in business valuation? When a business is being valued, consider the real estate Why financial experts should explain themselves Using regression analysis in litigation and valuation Anti-Money Laundering Bankruptcy and Insolvency Business Valuations and Consulting Electronic Discovery Forensic Accounting Litigation Consulting Marital Dissolution New Business Ventures Restructuring, Monitoring, Receivership and Fiduciary Miami New York Baltimore Boca Raton Boulder Fort Lauderdale Orlando Valhalla India An Independent Member of Baker Tilly International
2 Rules of thumb: Do they have a place in business valuation? For many types of businesses, you can find a rule of thumb for valuing it. Rules of thumb are quick, easy to understand and use, and inexpensive. However, because they re generally based on industry averages, they fail to capture the specific characteristics of a business that drive its value. Rules of thumb may offer a rough indication of value that can be used to satisfy a business owner s curiosity or to serve as a reasonableness or sanity check on results derived from other methods. But they re no substitute for a comprehensive, formal valuation. What is a rule of thumb? The International Glossary of Business Valuation Terms defines rule of thumb as a mathematical formula developed from the relationship between price and certain variables based on experience, observation, hearsay, or a combination of these; usually industry specific. Typically, rules of thumb are expressed as multiples of revenues or some form of earnings or cash flow. They may also be based on multiples of assets or units of capacity or activity. For example, one rule of thumb for valuing motels is $20,000 per room. Rules of thumb come from many sources, including business brokers, industry consultants, trade associations, publications and word of mouth. Generally, they apply to small, single-site businesses, though some industries may have them for larger organizations. In both cases, many transactions are needed to yield market-derived price multiples. The best ones are industry- and geography-specific. What are the disadvantages? A rule of thumb is a variation of the market approach to valuation. Market-based methods value a business by analyzing valuation multiples from transactions involving similar businesses and making adjustments to reflect the subject s characteristics. Key to an accurate valuation is access to information to determine whether other companies and transactions are truly comparable and to identify appropriate adjustments. The problem with rules of thumb is that they re based on average multiples derived from transactions involving companies that may or may not be comparable to the subject. And, they re often based on subjective judgment or word of mouth rather than objective sources of verifiable data. Even if a rule of thumb is derived from solid market data, it s impossible without access to details about the underlying companies and transactions to determine whether the rule has any relevance to the subject company. For example, a common rule of thumb for valuing full-service restaurants is 30% of annual gross revenues. But prices in actual transactions range from well under 20% to well over 100% of gross revenues. Why such a wide range? It s because business value is affected by a variety of factors besides revenues, such as gross profits, lease and other expenses, cash flow, 2
3 growth, location, competition, management strength, and risk. A rule of thumb might produce a reasonable value for a business that s near the industry average in these areas, but, for businesses that deviate from the norm, rules of thumb are unreliable indicators of value. Also, rules of thumb generally don t account for transaction terms. For example, do transactions involve cash purchases or seller financing? Are they stock sales or asset sales? In applying a rule of thumb, should you add real estate and inventory to value? Should you subtract debt? The answers to these questions can have a significant impact on value, but rules of thumb are often silent on these issues. Last, rules of thumb can be misleading if their terms aren t defined. If a business is valued at three times earnings, for example, the result can vary dramatically depending on the definition of earnings. Does it mean after-tax earnings? Earnings before interest and taxes (EBIT)? Owner s discretionary cash flow? Handle with care In situations that demand accurate valuations such as business sales, litigation or tax planning rules of thumb are no substitute for professional valuations using generally accepted methods. What s more, rules of thumb used as a major valuation method will not likely survive scrutiny in court. They may be appropriate, however, for developing a rough, preliminary indication of value or for gauging the reasonableness of a formal valuation. u Rule of thumb in action Let s look at an example of the inherent weakness of many rules of thumb: Company A and Company B are IT businesses. One rule of thumb for IT businesses is three times earnings before interest and taxes (EBIT). Companies A and B each have $500,000 in EBIT in 2012, so each would be valued at $1.5 million under the rule of thumb. Suppose, however, that Company A s EBIT was $75,000 in 2010 and $200,000 in Company B s EBIT, on the other hand, was $1 million in 2010 and $750,000 in Although the rule of thumb values the two companies equally, an informed buyer would likely place a much higher value on Company A, particularly if there s reason to believe that its pattern of rapid growth will continue in future years. When a business is being valued, consider the real estate If a client owns an office building or manufacturing facility, or any other type of real estate for that matter, it will affect the business s value. So, the issue at hand is how? Finding out will generally require the input of both a business valuator and a real estate appraiser. Assumptions and inputs Business valuators and real estate appraisers use similar methods, but there are important distinctions between the two. Although both use some combination of the income, market and asset-based approaches to valuation, the assumptions and inputs on which they rely may be different. 3
4 A business valuator using the income approach, for example, might calculate the present value of the business s expected future earnings or cash flows, while a real estate appraiser might determine a property s fair market rental value. A business valuator using the market approach might refer to guideline public companies that are comparable with the subject business, while a real estate appraiser might look at sales of comparable buildings or land. Link between values Whether you need a business valuator, a real estate appraiser or both depends on the extent to which the business s value is linked to the value of its underlying real estate. If a company s revenues are derived from owning or leasing real estate, for example, a real estate appraiser is likely to be the primary valuation professional. Even so, a business valuator may be needed to determine how the form of ownership affects value. In other cases, real estate is incidental to business value. Say a business owns real estate simply as an investment, or it owns its facilities but derives its revenues primarily from non-real-estate-related activities, such as producing goods or providing services. Here, a business valuator takes the lead role, and a real estate appraiser may or may not be necessary, depending on the business s real estate holdings relative to its overall value. Nevertheless, non-real-estate businesses may derive significant value from the location or characteristics of their real estate. Examples include retail stores, auto dealerships and restaurants. For these businesses, a business valuator and real estate appraiser work together to determine the best approach for incorporating real estate value into enterprise value. Splitting value If a business has significant real estate holdings, splitting its value into its business and real estate components can lead to a more meaningful value conclusion. This is particularly true when the real estate produces little or no income but has appreciated greatly in value. A failure to split the business and real estate components could result in an incorrect value. Valuing the business as a whole may not reflect the real estate s contribution to value. If a business has significant real estate holdings, splitting its value into its business and real estate components can lead to a more meaningful value conclusion. To value real estate separately, the appraiser determines a fair market rental value for the property. The business valuator removes the real estate (and the related income and expense items) from the books and estimates a hypothetical rental expense to the business, which reduces the earnings or cash flows on which the valuation is based. The resulting business value is combined with the stand-alone value of the real estate to arrive at a total enterprise value. 4
5 When using the guideline public company method, whether real estate should be valued separately may depend on the comparability of the guideline companies. If the subject company owns its facility but guideline companies lease theirs, it may be appropriate to treat the real estate separately. The best solution With business valuations, it s necessary to consider the value of any real estate owned by the business. To ensure a solid valuation, work with a business valuator and a qualified real estate appraiser. u Why financial experts should explain themselves recent personal injury case illustrates why it s A critical for your financial experts to provide the reasoning behind their damages calculations when they testify. In Andler v. Clear Channel Broadcasting, Inc., a federal district court excluded a financial expert s testimony regarding the plaintiff s loss of future earning capacity, finding the expert s methodology unduly speculative. But the Sixth U.S. Circuit Court of Appeals reversed and ordered a new trial on damages. Why? Because it found that the lower court had confused the concepts of lost earning capacity and lost earnings. Expert relied on national averages Before her injuries, the plaintiff worked part time at a child care center, primarily so she could be near her young children. Her injuries forced her to change jobs, and in the following years she worked full time as a manicurist and pedicurist. Based on Bureau of Labor Statistics data, the plaintiff s expert estimated what she could have earned as a full-time child care worker but for her injuries. He also estimated her postinjury annual earning capacity as a full-time manicurist and pedicurist. Interestingly, the two figures were roughly the same. The expert based his estimate of lost earning capacity approximately $230,000 on the increased likelihood that the plaintiff would miss work and exit the workforce early as a result of her injuries. The district court excluded this damages testimony as unreliable and flawed. The court said that relying on national average salaries rather than the plaintiff s actual earnings (which were significantly lower) amounted to unreasonable speculation. 5
6 Appeals court had its say The Sixth Circuit disagreed. The plaintiff was seeking damages for loss of earning capacity, not lost earnings. The former, the court explained, is the difference between the amount of wages the plaintiff will be capable of earning over her working life after the injury and the amount she was capable of earning over her working life before her injury. The plaintiff s historical earnings are a factor to be considered in determining future earning power, but they re not conclusive. Plaintiffs who are underemployed at the time of an accident, for example, may be entitled to damages for loss of earning capacity based on their true capabilities and potential. Plaintiffs can recover damages for loss of earning capacity even if their wages increase after an accident, provided they can show that (but for their injuries) they would have earned even more. Damages calculations that depart from actual preinjury earnings can t be unduly speculative, however. In this case, the expert s testimony involved a degree of speculation for example, he assumed that the plaintiff would shift from part-time to full-time work as her children grew older. But this speculation, the court said, wasn t unrealistic. Be prepared In Andler, the damages expert s testimony ultimately was allowed, but not before the plaintiff went through a lengthy appeal process. Although there are no guarantees, you can minimize these headaches by ensuring that your financial experts explain the rationale behind their damages calculations at the trial level. u Using regression analysis in litigation and valuation Financial experts often use regression analysis and other statistical techniques in calculating damages, determining causation and conducting business valuations. Regression analysis can be a powerful, persuasive tool. But, as the recent federal court case ATA Airlines v. Federal Express demonstrates, it can also be dangerous in the wrong hands. How it works Although the math can be complex, the concept behind regression analysis is relatively simple. It s a statistical tool for analyzing relationships between two or more variables: one that you re attempting to explain (the dependent variable) and one or more that are believed to produce or correlate with changes in the dependent variable ( independent or explanatory variables). Typically, these relationships are visually represented on a graph. Regression analysis is useful in a variety of litigation and valuation contexts. It can be used, for example, to support (or refute) the argument that an announcement in the financial press caused a public company s stock price to fall. It can also reveal potentially discriminatory relationships between employee termination or wage rates and age or gender. In business valuations, regression analysis is often used to select appropriate price multiples by 6
7 focusing on the connection between termination rates and age and ignoring the significance of the nondiscriminatory explanation). Getting back to the case In the ATA Airlines v. Federal Express case, a $66 million lost profits award was based entirely on a regression analysis by the plaintiff s expert. The U.S. Court of Appeals for the Seventh Circuit threw out the award on liability grounds but still took the opportunity to castigate the judge, the expert and the lawyers for both parties. identifying which factors (such as operating cash flow, book value or earnings before interest and taxes) are better predictors of price. Causation vs. correlation The distinction between causation and correlation is critical. A strong positive correlation between variables A and B doesn t necessarily mean that A causes B. It could mean that B causes A or that a third variable, C, causes both A and B. In an age discrimination case, for example, the plaintiff s expert might use regression analysis to establish unlawful discrimination by showing a positive correlation between age and termination rates. The defendant s expert might challenge this conclusion by demonstrating a stronger relationship between termination rates and a different, nondiscriminatory explanatory variable, such as computer skills. Perhaps the defendant implemented a new computer system and terminated employees who lacked the requisite technological sophistication. If regression analysis shows a statistically significant relationship between computer skills and termination rates, it would support the defendant s position that the terminations weren t age-driven, even though they had a disparate impact on older workers. This example illustrates the importance of the underlying assumptions to an accurate regression model. It also shows how faulty assumptions can produce misleading results (for example, by According to the Seventh Circuit, the expert s regression analysis was so deeply flawed that it should never have been allowed to be put before a jury. The trial judge failed to fulfill his duty to evaluate the testimony s admissibility in advance. It didn t help that neither party s lawyers understand regression analysis or they are unable to communicate their understanding in plain English. Regression analysis can reveal potentially discriminatory relationships between employee termination or wage rates and age or gender. The court also criticized the defense for offering no alternative measure of damages. It was no surprise, the court said, that the jury, presented with an unintelligible damages analysis, simply awarded the exact figure that ATA had asked for in damages. Do your homework To learn more about regression analysis, ask your financial experts before trial. There are also a number of nontechnical publications on the subject, including the Federal Judicial Center s Reference Guide on Multiple Regression. u This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use VLBnd12 7
8
AICPA Valuation Services VS Section Statements on Standards for Valuation Services VS Section 100 Valuation of a Business, Business Ownership
AICPA Valuation Services VS Section Statements on Standards for Valuation Services VS Section 100 Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset Calculation Engagements
More informationValuation Issues and Divorce
Lori Wilhelmy, ASA 513.813.4134 LWilhelmy@ComStockAdvisors.com Valuation Issues and Divorce The valuation of a closely held business for divorce purposes is based on valuation theory, state statute and
More informationBusiness Valuation More Art Than Science
Business Valuation More Art Than Science One of the more difficult aspects of business planning is business valuation. It is also one of the more important aspects. While owners of closely held businesses
More informationV aluation. Concepts. Adding up the little stuff <> Normalization adjustments under the income approach. inside:
V aluation Concepts inside: Adding up the little stuff Normalization adjustments under the income approach Lack of control discounts don t always apply to minority interests Are S corporations worth
More informationAnatomy Of An Appraisal
Anatomy Of An Appraisal Leslie A. Fields The most important thing to know about an appraisal report is how to review and critique it. Leslie A. Fields a partner with the Law Firm of Faegre & Benson LLP,
More informationChapter 35. The Appraiser's Sales Comparison Approach INTRODUCTION
Chapter 35 The Appraiser's Sales Comparison Approach INTRODUCTION The most commonly used appraisal technique is the sales comparison approach. The fundamental concept underlying this approach is that market
More informationHow to Read a Real Estate Appraisal Report
How to Read a Real Estate Appraisal Report Much of the private, corporate and public wealth of the world consists of real estate. The magnitude of this fundamental resource creates a need for informed
More informationEXPLANATION OF MARKET MODELING IN THE CURRENT KANSAS CAMA SYSTEM
EXPLANATION OF MARKET MODELING IN THE CURRENT KANSAS CAMA SYSTEM I have been asked on numerous occasions to provide a lay man s explanation of the market modeling system of CAMA. I do not claim to be an
More informationPlease find attached a brief overview of our services and an informative review of Chase Group s SBA-compliant business valuation services.
THE CHASE GROUP - Business Brokers Mergers, Acquisitions, Financing & Valuation Services 41185 Golden Gate Circle, Suite 202 Murrieta, CA 92562 951.541.0414 tel 951.303.8157 fax www.chasegroup.us 2012
More informationGuide to Appraisal Reports
Guide to Appraisal Reports What is an appraisal? An appraisal is an independent valuation of real property prepared by a qualified Appraiser and fully documented in a report. Based on a series of appraisal
More informationReal Estate Companies A Business Valuation Primer (Series 1)
Article Real Estate Companies A Business Valuation Primer (Series 1) May 2018 Families and organizations that own and operate portfolios of real estate make up a significant segment of MPI s clients. We
More informationconcepts and techniques
concepts and techniques S a m p l e Timed Outline Topic Area DAY 1 Reference(s) Learning Objective The student will learn Teaching Method Time Segment (Minutes) Chapter 1: Introduction to Sales Comparison
More informationAssessment Year 2016 Assessment Valuations / Mass Appraisal Summary Report
Assessment Year 2016 Assessment Valuations / Mass Appraisal Summary Report Overview Following up on last year s work, additional work was done cleaning up the sales data. The land valuation model was further
More informationDETERMINING AGENCY VALUE PART 2
DETERMINING AGENCY VALUE PART 2 NORMALIZING THE INCOME STATEMENT By: Chuck Coyne, ASA This month we continue our discussion of how to determine an agency s value. Last month we briefly discussed some of
More informationFollowing is an example of an income and expense benchmark worksheet:
After analyzing income and expense information and establishing typical rents and expenses, apply benchmarks and base standards to the reappraisal area. Following is an example of an income and expense
More informationInitial sales ratio to determine the current overall level of value. Number of sales vacant and improved, by neighborhood.
Introduction The International Association of Assessing Officers (IAAO) defines the market approach: In its broadest use, it might denote any valuation procedure intended to produce an estimate of market
More informationSelling The Obsolescence Argument From the Appraiser s Prospective
Selling The Obsolescence Argument From the Appraiser s Prospective John Ray Director American Appraisal Associates, Inc. Dallas, Texas (214) 459-6408 johnray@american-appraisal.com An independent third-party
More informationBUSI 330 Suggested Answers to Review and Discussion Questions: Lesson 10
BUSI 330 Suggested Answers to Review and Discussion Questions: Lesson 10 1. The client should give you a copy of their income and expense statements for the last 3 years showing their rental income by
More informationVillage of Scarsdale
Village of Scarsdale VILLAGE HALL / 1001 POST ROAD / SCARSDALE, NY 10583 914.722.1110 / WWW.SCARSDALE.COM Village Wide Revaluation Frequently Asked Questions Q1. How was the land value for each parcel
More informationUse of Comparables. Claims Prevention Bulletin [CP-17-E] March 1996
March 1996 The use of comparables arises almost daily for all appraisers. especially those engaged in residential practice, where appraisals are being prepared for mortgage underwriting purposes. That
More informationThe Impact of Using. Market-Value to Replacement-Cost. Ratios on Housing Insurance in Toledo Neighborhoods
The Impact of Using Market-Value to Replacement-Cost Ratios on Housing Insurance in Toledo Neighborhoods February 12, 1999 Urban Affairs Center The University of Toledo Toledo, OH 43606-3390 Prepared by
More informationCollateral Risk Network. The Language of Data. April Elizabeth Green
Collateral Risk Network April 2012 www.rel-e-vant.com The Language of Data Elizabeth Green 1 2 CRN April 2012 Appraisal Prose? I came to explore the wreck. The words are purposes. The words are maps. I
More informationAVA. Accredited Valuation Analyst - AVA Exam.
NACVA AVA Accredited Valuation Analyst - AVA Exam TYPE: DEMO http://www.examskey.com/ava.html Examskey NACVA AVA exam demo product is here for you to test the quality of the product. This NACVA AVA demo
More informationSUBJECT: The Appraisal of Real Property That May Be Impacted by Environmental Contamination
1 ADVISORY OPINION 9 (AO-9) 1 2 3 4 This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret existing standards. Advisory Opinions are issued to illustrate
More information86 years in the making Caspar G Haas 1922 Sales Prices as a Basis for Estimating Farmland Value
2 Our Journey Begins 86 years in the making Caspar G Haas 1922 Sales Prices as a Basis for Estimating Farmland Value Starting at the beginning. Mass Appraisal and Single Property Appraisal Appraisal
More informationMini Summit VIII Fair Market Value Update: FMV of Services
Mini Summit VIII Fair Market Value Update: FMV of Services Mark DeWyngaert, PhD, MBA John Moose, MBA, CPA, ABV Thirteenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum
More informationIN THE SUPREME COURT OF TEXAS
IN THE SUPREME COURT OF TEXAS 444444444444 NO. 07-0896 444444444444 THE STATE OF TEXAS, PETITIONER, v. BRISTOL HOTEL ASSET CO., RESPONDENT 4444444444444444444444444444444444444444444444444444 ON PETITION
More informationVALUATION OF PROPERTY. property. REALTORS need to keep in mind first, that the Occupational Code limits what
VALUATION OF PROPERTY I. INTRODUCTION REALTORS are often asked for their opinion on the value of a particular piece of property. REALTORS need to keep in mind first, that the Occupational Code limits what
More informationPractice Valuations. Welcome To The Digital Learning Center. Today s Presentation. Course Faculty. Presented by. What s Your Practice Worth?
Welcome To The Digital Learning Center Presented by Your Partner In Building High Performance Practices Today s Presentation Practice Valuations What s Your Practice Worth? Course Faculty R. Thomas (Tom)
More informationFirst Exposure Draft of proposed changes for the edition of the Uniform Standards of Professional Appraisal Practice
TO: FROM: RE: All Interested Parties Sandra Guilfoil, Chair Appraisal Standards Board First Exposure Draft of proposed changes for the 2012-13 edition of the Uniform Standards of Professional Appraisal
More informationReal Estate Appraisal Professional Standards
Real Estate Appraisal Professional Standards Summary This proposal is to amend the Florida Administrative Code (FAC) to allow a Certified Residential Appraiser or a Certified General Appraiser to use standards
More informationBusiness Valuation Methods. Submitted by Paul Marquez
Business Valuation Methods Submitted by Paul Marquez 59 I. BUSINESS VALUATION METHODS A. Rules of Thumb B. Asset-Based Methods of Valuation C. Income Statement Methods of Valuation D. Market-Based Methods
More informationBasic Appraisal Procedures
Hondros Learning Basic Appraisal Procedures Timed Outline Topic Area Reference(s) Learning Objectives The student will be able to identify and/or apply: Teaching Method Time Segment (Minutes) Day 1 Chapter
More informationDEALING WITH APPRAISERS AND OTHER EXPERTS:
DEALING WITH APPRAISERS AND OTHER EXPERTS: Challenges In Professionalism, Ethics and Related Issues Charles N. Pursley, Jr., Esquire Pursley Lowery Meeks LLP 260 Peachtree Street, Suite 2000 Atlanta, Georgia
More informationASSESSORS ANSWER FREQUENTLY ASKED QUESTIONS ABOUT REAL PROPERTY Assessors Office, 37 Main Street
A. THE ASSESSMENT PROCESS: ASSESSORS ANSWER FREQUENTLY ASKED QUESTIONS ABOUT REAL PROPERTY Assessors Office, 37 Main Street What is mass appraisal? Assessors must value all real and personal property in
More informationMAAO Sales Ratio Committee 2013 Fall Conference Seminar
MAAO Sales Ratio Committee 2013 Fall Conference Seminar Presented By: Al Whitcomb Dakota County (Retired) John Keefe Chisago County Assessor Brent Reid City of Coon Rapids Michael Thompson Scott County
More informationAdvanced M&A and Merger Models Quiz Questions
Advanced M&A and Merger Models Quiz Questions Transaction Assumptions and Sources & Uses Purchase Price Allocation & Balance Sheet Combination Combining the Income Statement Revenue, Expense, and CapEx
More informationProcedures Used to Calculate Property Taxes for Agricultural Land in Mississippi
No. 1350 Information Sheet June 2018 Procedures Used to Calculate Property Taxes for Agricultural Land in Mississippi Stan R. Spurlock, Ian A. Munn, and James E. Henderson INTRODUCTION Agricultural land
More informationHow to use home valuations to connect with prospects and build your business
How to use home valuations to connect with prospects and build your business Using Homes.com Home Values to make connections and build business By Charles Warnock, Homes Media Solutions In recent years,
More informationCalifornia s Eminent Domain Law authorizes
Understanding Goodwill Appraisals By Patrick M. Millar, ASA Section 1263.510 of California s Eminent Domain Law authorizes compensation for loss of business goodwill to owners of businesses operating on
More informationIREDELL COUNTY 2015 APPRAISAL MANUAL
STATISTICS AND THE APPRAISAL PROCESS INTRODUCTION Statistics offer a way for the appraiser to qualify many of the heretofore qualitative decisions which he has been forced to use in assigning values. In
More informationSpecial Purpose Properties. Special Valuation Considerations
Special Purpose Properties Special Valuation Considerations 2017 Case Study in Ottawa: New Automobile Dealership Many brand-specific specialties Cost: $4,000,000 (including land and a developer fee) Sales
More informationWednesday, August 8, 2012 Valuing Businesses: Working with Experts to Present Valuation Evidence in Business and Insolvency Contexts
Wednesday, August 8, 2012 Valuing Businesses: Working with Experts to Present Valuation Evidence in Business and Insolvency Contexts Latham & Watkins operates worldwide as a limited liability partnership
More informationMass Appraisal of Income-Producing Properties
Chapter 10 Mass Appraisal of Income-Producing Properties Whether valuing income-producing property or residential property, you can use similar information and methods for collecting and analyzing data
More informationMODULE 7-A: APPRAISALS, BPOS AND USPAP
MODULE 7-A: APPRAISALS, BPOS AND USPAP LEARNING OBJECTIVES One of the most challenging aspects of the real estate business is the development of prices or values of the rights to real estate. Buyers and
More informationData Verification. Professional Excellence Bulletin [PP-14-E] February 1995
Professional Excellence Bulletin [PP-14-E] February 1995 Although obviously a cornerstone of appraisal practice, data verification has not been considered a major problem to real estate appraisers in the
More informationContracting out of the 1954 Act - but not as you know it
Real Estate September 2016 Contracting out of the 1954 Act - but not as you know it Key Contact Introduction Mark Barley Partner Property Litigation T: +44(0) 2380 20 8153 E: mark.barley @bonddickinson.com
More informationCOMMON ERRORS IN BUSINESS VALUATIONS
27th Annual 1995 FAMILY LAW REFERENCE BOOK Copyright 1995 Los Angeles County Bar Association No reproduction of this book may be made without the express written permission of the Family Law Section of
More informationIN THE SUPREME COURT OF FLORIDA
IN THE SUPREME COURT OF FLORIDA RICHARD KEITH MARTIN, ROBERT DOUGLAS MARTIN, MARTIN COMPANIES OF DAYTONA BEACH, MARTIN ASPHALT COMPANY AND MARTIN PAVING COMPANY, Petitioners, CASE NO: 92,046 vs. DEPARTMENT
More informationEVGN 11. The Valuer s Use of Statistical Tools
EVGN 11 The Valuer s Use of Statistical Tools 1. Introduction 2. Preconditions for the use of AVMs 3. Limitations on the use of AVMs once the preconditions have been met 4. Portfolio valuation 1. Introduction
More informationGuide Note 15 Assumptions and Hypothetical Conditions
Guide Note 15 Assumptions and Hypothetical Conditions Introduction Appraisal and review opinions are often premised on certain stated conditions. These include assumptions (general, and special or extraordinary)
More informationAlways Accurate, Always on Time
Always Accurate, Always on Time Clearing the Air: Going-Concern Valuation vs General Valuation Knowing When you Can be Better Served by a More In-depth Valuation Expert Jan, 2015 Clearing the Air: Going-Concern
More informationChapter 12 Changes Since This is just a brief and cursory comparison. More analysis will be done at a later date.
Chapter 12 Changes Since 1986 This approach to Fiscal Analysis was first done in 1986 for the City of Anoka. It was the first of its kind and was recognized by the National Science Foundation (NSF). Geographic
More informationProperty Tax Oversight Bulletin: PTO FLORIDA DEPARTMENT OF REVENUE PROPERTY TAX INFORMATIONAL BULLETIN
Property Tax Oversight Bulletin: PTO 08-02 To: Property Appraisers From: James McAdams Date: March 18, 2008 Bulletin: PTO 08-02 FLORIDA DEPARTMENT OF REVENUE PROPERTY TAX INFORMATIONAL BULLETIN [NOTE:
More informationWYOMING DEPARTMENT OF REVENUE CHAPTER 7 PROPERTY TAX VALUATION METHODOLOGY AND ASSESSMENT (DEPARTMENT ASSESSMENTS)
CHAPTER 7 PROPERTY TAX VALUATION METHODOLOGY AND ASSESSMENT (DEPARTMENT ASSESSMENTS) Section 1. Authority. These Rules are promulgated under the authority of W.S. 39-11-102(b). Section 2. Purpose of Rules.
More informationLITIGATING IN A MASS APPRAISAL ENVIRONMENT
11 th Mass Appraisal Valuation Symposium Innovation, Transformation, Knowledge Enhancement and Improved Efficiencies in Mass Appraisal Niagara Falls, Canada May 17-18, 2016 LITIGATING IN A MASS APPRAISAL
More informationVALUATION OF ASSETS IN DIVORCE
The University of Texas School of Law Presented: 8 th Annual Family Law On The Front Lines June 19-20, 2008 Galveston, Texas VALUATION OF ASSETS IN DIVORCE RANDALL B. WILHITE LOOPER REED & MCGRAW, P.C.
More informationHow Did Foreclosures Affect Property Values in Georgia School Districts?
Tulane Economics Working Paper Series How Did Foreclosures Affect Property Values in Georgia School Districts? James Alm Department of Economics Tulane University New Orleans, LA jalm@tulane.edu Robert
More informationSales Associate Course
Sales Associate Course Chapter Sixteen Appraisal 1 2 Appraiser Specific amount Impartial (non biased) Defendable Estimate (Opinion) of value Fee based on time and difficulty Must follow Uniform Standards
More informationAPPRAISAL REVIEW REPORT
APPRAISAL REVIEW REPORT REVIEW OF APPRAISALS BY BECCARIA & WEBER, INC. RE: BUENA VISTA MOBILE HOME PARK PALO AL TO, CALIFORNIA REVIEWED BY JAMES BRABANT, MAI PREPARED FOR Law Foundation of Silicon Valley,
More informationThe TAUREAN Residential Valuation System An Overview
The TAUREAN Residential Valuation System An Overview By Michael L. Robbins, Ph.D., CRE Taurean Residential Valuation Services, LLC 150 N. Sunny Slope Road, Suite 225, Brookfield, WI 53005 Phone: (262)
More informationCENTER FOR PROFESSIONAL EDUCATION 9590 West 14 th Avenue Lakewood, CO (720)
CENTER FOR PROFESSIONAL EDUCATION 9590 West 14 th Avenue Lakewood, CO 80215 (720) 889-0797 Approved and Regulated by Division of Private Occupational Schools, Department of Higher Education, State of Colorado
More informationAPPEAL from a judgment of the circuit court for Winnebago County: DANIEL J. BISSETT, Judge. Affirmed. Before Neubauer, P.J., Reilly and Gundrum, JJ.
COURT OF APPEALS DECISION DATED AND FILED December 17, 2014 Diane M. Fremgen Clerk of Court of Appeals NOTICE This opinion is subject to further editing. If published, the official version will appear
More informationContract-Related Intangible
Income Tax Insights Valuation of Contract-Related Intangible Assets Robert F. Reilly, CPA The valuation of contract-related intangible assets is often an issue in matters related to income tax, gift tax,
More information2018 This paper and/or presentation provides information on general legal issues. It is not intended to provide advice on any specific legal matter
2018 This paper and/or presentation provides information on general legal issues. It is not intended to provide advice on any specific legal matter or factual situation, and should not be construed as
More informationAppraisers and Assessors of Real Estate
http://www.bls.gov/oco/ocos300.htm Appraisers and Assessors of Real Estate * Nature of the Work * Training, Other Qualifications, and Advancement * Employment * Job Outlook * Projections Data * Earnings
More informationTECHNICAL INFORMATION PAPER VALUATION OF SELF STORAGE FACILITIES
TECHNICAL INFORMATION PAPER VALUATION OF SELF STORAGE FACILITIES Reference ANZVTIP 5 Valuation of Self Storage Facilities Effective 23 November 2016 Review Owner National Manager Professional Standards
More informationASA s 7 th Annual Equipment Valuation Conference. Cost Approach and Sales Comparison Approach: A Closer Look at Depreciation
ASA s 7 th Annual Equipment Valuation Conference Cost Approach and Sales Comparison Approach: A Closer Look at Depreciation Background Information Rick Wilichowski Managing Director, Machinery & Equipment
More information3 Selected Cases On Ground Leases
3 Selected Cases On Ground Leases 3.1 INTRODUCTION Certain problems arise again and again in the world of ground leases. Most of this book seeks to prevent those problems by recognizing that they can occur
More informationREAL ESTATE MARKET AND YOUR TAX
REAL ESTATE MARKET AND YOUR TAX ASSESSMENT All of us Island property owners received our tax assessment notices from the County recently. As real estate agents we have been fielding many questions about
More informationCap Rate Trends, Methodology and Analysis. Dane R. Anderson MAI, CCIM Appraisal & Litigation Services Director
Cap Rate Trends, Methodology and Analysis Dane R. Anderson MAI, CCIM Appraisal & Litigation Services Director 1 Quickly The Income Approach Basis of the Approach Present worth of future benefits Two Methods:
More informationComparison of Selected Financial Ratios for the Pallet Industry. by Bruce G. Hansen 1 and Cynthia D. West
Comparison of Selected Financial Ratios for the Pallet Industry by Bruce G. Hansen 1 and Cynthia D. West Abstract This paper presents the results of a financial ratio survey conducted by the National Wooden
More informationNational Association for several important reasons: GOING BY THE BOOK
GOING BY THE BOOK OR WHAT EVERY REALTOR SHOULD KNOW ABOUT THE REALTOR DUES FORMULA EDITORS NOTE: This article has been prepared at the request of the NATIONAL ASSOCIATION OF REALTORS by its General Counsel,
More informationGuide Note 16 Arbitration 1
Guide Note 16 Arbitration 1 Introduction Real estate valuation professionals ( Valuer or Valuers ) are often retained to provide services in arbitration matters 2 either as arbitrators or expert witnesses
More informationPart 1. Estimating Land Value Using a Land Residual Technique Based on Discounted Cash Flow Analysis
Table of Contents Overview... v Seminar Schedule... ix SECTION 1 Part 1. Estimating Land Value Using a Land Residual Technique Based on Discounted Cash Flow Analysis Preview Part 1... 1 Land Residual Technique...
More informationESOP Feasibility and Valuation Basics
ESOP Feasibility and Valuation Basics Ohio Employee Ownership Center Akron/Fairlawn Hilton Fairlawn, Ohio April 21, 2006 Richard A. Schlueter rschlueter@comstockvaluation.com C VA 1 Levee Way, Suite 3109
More informationChapter 37. The Appraiser's Cost Approach INTRODUCTION
Chapter 37 The Appraiser's Cost Approach INTRODUCTION The cost approach for estimating current market value starts with the recognition that a parcel of real estate contains two components - the land and
More informationBefore the Minnesota Public Utilities Commission State of Minnesota. Docket No. E002/GR Exhibit (LMC-1) Property Taxes
Direct Testimony and Schedules Leanna M. Chapman Before the Minnesota Public Utilities Commission State of Minnesota In the Matter of the Application of Northern States Power Company for Authority to Increase
More informationThe Local Impact of Home Building in Douglas County, Nevada. Income, Jobs, and Taxes generated. Prepared by the Housing Policy Department
The Local Impact of Home Building in Douglas County, Nevada Income, Jobs, and Taxes generated = Prepared by the Housing Policy Department May 2007 National Association of Home Builders 1201 15th Street,
More informationNATIONAL ASSOCIATION OF REALTORS Code of Ethics Video Series. Article 4 and Related Case Interpretations
Article 4 and Related Case Interpretations Article 4 REALTORS shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member
More informationProving Depreciation
Institute for Professionals in Taxation 40 th Annual Property Tax Symposium Tucson, Arizona Proving Depreciation Presentation Concepts and Content: Kathy G. Spletter, ASA Stancil & Co. Irving, Texas kathy.spletter@stancilco.com
More informationCABARRUS COUNTY 2016 APPRAISAL MANUAL
STATISTICS AND THE APPRAISAL PROCESS PREFACE Like many of the technical aspects of appraising, such as income valuation, you have to work with and use statistics before you can really begin to understand
More informationARIZONA TAX COURT TX /18/2006 HONORABLE MARK W. ARMSTRONG
HONORABLE MARK W. ARMSTRONG CLERK OF THE COURT L. Slaughter Deputy FILED: CAMELBACK ESPLANADE ASSOCIATION, THE JIM L WRIGHT v. MARICOPA COUNTY JERRY A FRIES PAUL J MOONEY PAUL MOORE UNDER ADVISEMENT RULING
More informationFORENSIC REPORT EXAMINER
WHAT CAN A DO FOR YOU? TELL YOU WHAT YOU DON T KNOW! ANTHONY F. MOLLICA, MAI, CRE, ASA 1601 Bethel Road, Columbus, Ohio 43220 (614) 459-1140 AFMollica@AOL.COM -1- ANTHONY F. MOLLICA, MAI, CRE, ASA The
More informationCornerstone 2 Basic Valuation of Machinery and Equipment
INSTITUTE FOR PROFESSIONALS IN TAXATION PERSONAL PROPERTY TAX SCHOOL Cornerstone 2 Basic Valuation of Machinery and Equipment Learning Objectives At the end of this section, the learner will be able to:
More informationSales Ratio: Alternative Calculation Methods
For Discussion: Summary of proposals to amend State Board of Equalization sales ratio calculations June 3, 2010 One of the primary purposes of the sales ratio study is to measure how well assessors track
More information[PROPOSED REVISED] CHAPTER 16 LOS ANGELES COUNTY COURT RULES
[PROPOSED REVISED] CHAPTER 16 LOS ANGELES COUNTY COURT RULES Set forth below is a proposed complete revision of Chapter 16, Eminent Domain, of the Local Rules. September 30, 2009 Commissioner Bruce E.
More informationFiling a property assessment complaint and preparing for your hearing. Alberta Municipal Affairs
Filing a property assessment complaint and preparing for your hearing Alberta Municipal Affairs Alberta s Municipal Government Act, the 2018 Matters Relating to Assessment Complaints Regulation, and the
More informationThe survey also examines the underlying causes of FVM and impairment audit
Acuitas, Inc. s Survey of Fair Value Audit April 20122 Executive Summary Public Company Accounting Oversight Board (PCAOB) inspections have noted a dramatic increase in the number of fair value measurement
More informationCalifornia Real Estate License Exam Prep: Unlocking the DRE Salesperson and Broker Exam 4th Edition
California Real Estate License Exam Prep: Unlocking the DRE Salesperson and Broker Exam 4th Edition ANSWER SHEET INSTRUCTIONS: The exam consists of multiple choice questions. Multiple choice questions
More informationReport. complaint no 03/B/13806 against Oxford City Council. on an investigation into. 31 May 2006
Report on an investigation into complaint no 03/B/13806 against Oxford City Council 31 May 2006 The Oaks No 2, Westwood Way, Westwood Business Park, Coventry CV4 8JB Investigation into complaint no 03/B/13806
More informationThe Cost of Property, Plant, Equipment
1 The Cost of Property, Plant, Equipment The cost of property, plant, and equipment includes the purchase price of the asset and all expenditures necessary to prepare the asset for its intended use. Land.
More informationEdmonton Composite Assessment Review Board
Edmonton Composite Assessment Review Board Citation: CVG v The City of Edmonton, 2013 ECARB 01878 Assessment Roll Number: 10002533 Municipal Address: 10904 102 A venue NW Assessment Year: 2013 Assessment
More informationMPEEM The New and Improved Residual Technique of Reserve Valuation
MPEEM The New and Improved Residual Technique of Reserve Valuation Prepared by Alan K. Stagg, PG, CMA Stagg Resource Consultants, Inc. Cross Lanes, West Virginia ABSTRACT The residual technique of reserve
More informationContent Contributed by the Appraisal Database and Mentoring Services (ADAM) Around the Valuation World in 90 Minutes Monthly Webzine
Content Contributed by the Appraisal Database and Mentoring Services (ADAM) Around the Valuation World in 90 Minutes Monthly Webzine DISCLAIMER All rights reserved. No part of this work covered by the
More informationInteragency Appraisal and
Interagency Appraisal and Evaluation (IAEG) Workshop Purpose (77456) Supersedes the 1994 Interagency Appraisal & Evaluation Guidelines Address supervisory matters relating to real estate appraisal and
More informationUNIFORM APPRAISAL DATASET (UAD) FHA SPOTLIGHT - SELECTION AND VERIFICATION OF COMPARABLE SALES
Spring 2011 Issue 3 FHA APPRAISER In This Issue: Welcome to the third issue of the Federal Housing Administration Appraiser Roster Newsletter. We hope you will find it informative. Uniform Appraisal Dataset
More informationEdmonton Composite Assessment Review Board
Edmonton Composite Assessment Review Board Citation: CVG v The City of Edmonton, 2013 ECARB 01877 Assessment Roll Number: 9942678 Municipal Address: 10020 103 A venue NW Assessment Year: 2013 Assessment
More informationCity of New York OFFICE OF THE COMPTROLLER. Scott M. Stringer COMPTROLLER AUDIT AND SPECIAL REPORTS
City of New York OFFICE OF THE COMPTROLLER Scott M. Stringer COMPTROLLER AUDIT AND SPECIAL REPORTS Marjorie Landa Deputy Comptroller for Audit Audit Report on the Tax Classification of Real Property in
More informationEvaluating Measure 37 Claims
Three Methods for EM 89-E March 007 Evaluating Measure 7 Claims W.K. Jaeger Executive summary Measure 7 imposes an enormous burden on government. It asks government to know the unknowable: what would the
More information