About admin

This author has not yet filled in any details.
So far admin has created 36 blog entries.

WACC vs. APV

Recently, I was exposed to a commonly accepted income-based valuation approach in academic circles referred to as APV. After close examination, it occurred to me that it should be at least part of the conversation in our industry. It has clear advantages over the often used discounted cash flow approach which uses what we will [...]

By |2018-06-20T18:53:54+00:00March 23rd, 2014|Valuation|Comments Off on WACC vs. APV

IRC Section 2701, Special Valuation Rules

I had intended to write a simple blog entry about taxable estate gifts and transfers, but I wound up circling the rabbit hole of IRC Section 2701. Section 2701, titled "Special valuation rules in case of transfers of certain interests in corporations or partnerships," sets forth valuation rules for gifts of certain interests in closely [...]

By |2018-06-20T18:54:17+00:00March 12th, 2014|Financial, Taxes|Comments Off on IRC Section 2701, Special Valuation Rules

Interest Rate Swap Valuation: A Basic Adjustment for Convexity Bias in Eurodollar Futures Quotes

Recently I was tasked with researching and developing a financial model for use in valuing several plain vanilla interest rate swaps held by a large client for the purposes of marking the instruments to market under FASB 815, Derivatives and Hedging. Being the doe-eyed rookie and immersed in study for the CFA examinations, I was [...]

By |2018-06-20T18:54:29+00:00August 27th, 2013|Valuation|Comments Off on Interest Rate Swap Valuation: A Basic Adjustment for Convexity Bias in Eurodollar Futures Quotes

Establishing Empirical Market Based Support for Discounts: Examining Private Equity Returns as Compared to Public Market Returns

Several research groups and academic experts measure the returns of the private equity asset class to assess its relative return performance and investment merits. This research, which is gathered from the general and limited partners who run and invest in such funds, provides important market based data to assist institutional investors in determining several factors. [...]

By |2013-12-19T17:15:15+00:00August 8th, 2013|Featured|Comments Off on Establishing Empirical Market Based Support for Discounts: Examining Private Equity Returns as Compared to Public Market Returns

What Are TSRs and How Do We Value Them?

Investors buzz about corporate governance, specifically, in the context of executive compensation.  A handful of buzzwords underscore the push for appropriate incentive plans for corporate executives.  The prevalence of catchphrases such as “pay for performance,” “shareholder alignment,” “say on pay,” and “long-term incentives” seems to correspond with the number of performance awards that we have [...]

By |2013-12-19T17:15:46+00:00July 31st, 2013|Featured|Comments Off on What Are TSRs and How Do We Value Them?

The Capitalization of Earnings versus Capitalization of Excess Earnings Methods

The capitalization of earnings method is an approach acknowledged by the IRS that converts a single income data point to an indication of value. It can be applied to historical, current, or expected income, as represented by earnings, EBIT, EBITDA, free cash flows to equity or invested capital. This method assumes all of the assets [...]

By |2014-06-20T15:27:58+00:00February 1st, 2012|Featured|Comments Off on The Capitalization of Earnings versus Capitalization of Excess Earnings Methods

A Simplified Treasury Stock Approach to Accounting for Options, per Big 4

A while back, we faced a hiccup in the audit review process on two of our valuation reports for a client. The valuation review team at [Big 4] took issue with our treatment of options on common stock. Specifically, [Big 4] had two basic problems with our model: (1) our method of adding option proceeds [...]

By |2014-06-20T15:32:31+00:00January 1st, 2012|Featured|Comments Off on A Simplified Treasury Stock Approach to Accounting for Options, per Big 4

Brothers in Arms

A few comments for our valuation review brethren out there – first off, I understand you. You have a stack of 50 reports you need to review, you are being torn to pieces by your documentation requirements, yet are pushed to the brink by the audit partners trying to keep their clients and respond to [...]

By |2018-06-20T18:54:48+00:00October 12th, 2011|Valuation|Comments Off on Brothers in Arms

Asset Group versus Individual Assets

Due to the fact that the fair value standards and their applications are evolving, especially in the realm of level 3 measurements, we find in audit reviews that valuation reviewers have differing opinions on a variety of specific applications, which oftentimes (a) make us look bad and (b) keep us sufficiently confused. While we could [...]

By |2018-06-20T18:55:00+00:00October 4th, 2011|Valuation|Comments Off on Asset Group versus Individual Assets

Valuing Executive Equity Compensation for Fair Market Value and Fair Value

I had two interesting engagements recently wherein I was asked to value variable executive equity compensation. One of the projects was for tax/fair market value purposes, and the other was for financial reporting, to determine the contingent liability associated with the equity comp. In the first case, for tax, I looked at the equity, or [...]

By |2013-12-19T17:17:24+00:00October 1st, 2011|Featured|Comments Off on Valuing Executive Equity Compensation for Fair Market Value and Fair Value