Some golden nuggets from the AICPA FVS confab

It was great to see the turnout at the AICPA & CIMA Forensic and Valuation Services Conference in Las Vegas last week. The attendee list on the mobile app contained about 900 names (including staff, speakers, and exhibitors), and it was about a 50-50 mix of valuation and forensic practitioners. There were over 60 sessions to choose from over the three days, and here are some nuggets from the first day:

• We’ve just “scratched the surface” with AI, which is poised to add several trillion dollars of value to companies;
• The updated AICPA business combinations guide is expected to be published in Spring/Summer 2024—and the PE/VC guide is also being revised;
• Young practitioners need the “why” as well as the “what,” especially when doing mundane tasks—tell them the reasons and what’s at stake;
• Although the recent Cecil case was a win for tax affecting (even the IRS tax affected), it will not be a slam dunk going forward;
• Professional liability claims against experts are more than just the amount of fees—triers of fact feel that’s too low, so a 2x-to-3x multiple of fees is the typical range;
• If a client wants to fire the attorney on your engagement, the expert should stay out of that conversation—it’s a no-win;
• The new amendments designed to put more teeth into Rule 702 go into effect December 1—but courts have already been citing them when deciding to exclude expert testimony; and
•  A practice opportunity exists for verifying ESG-related claims companies make—they are often not true.

In the Exhibit Hall, two vendors of AI-powered tools drew noticeable interest from attendees: Valid8, which helps examine data in financial documents (bank statements, check registers, ledger transactions, etc.), and Valutico, which does a full-company valuation including a qualitative analysis, comp selection, cost of capital—and even ESG adjustments.

We’ll have more takeaways in next week’s issue.

Next year’s FVS conference will be in Dallas at the Hyatt Regency Oct. 28-30, 2024.

Recovery of both lost profits and disgorgement not allowed in New York case

In a New York case, the issue of damages involved a Lego interpretation model of the Second Beit Hamikdash, or Second Holy Temple, and an alleged infringement of the copyright on this model (click here to see the model).

Daubert challenge: The court struck the plaintiff’s expert’s damages of a product related to the Temple Product but allowed testimony of damages on the Temple Product. The court also struck the plaintiff’s expert’s testimony that the plaintiff should be awarded lost profits on the Temple Product plus a disgorgement of the defendants’ profits. Both may not be awarded, the court ruled. The court also struck portions of the defendants’ rebuttal testimony and report.

The case is JBrick, LLC v. Chazak Kinder, Inc., 2023 U.S., Dist. LEXIS 174473 (Sept. 28, 2023), and a case analysis and full court opinion are on the BVLaw platform.

Don’t hold your breath over the DOL valuation regs, some say

While in Las Vegas, BVWire stopped in at the ESOP Association’s Employee Owned Conference, billed as the largest ESOP conference in the world. In the reception area and the Exhibit Hall, we ran into several providers of ESOP valuation services, who told us they are not very confident that the Department of Labor will issue its much-awaited proposed valuation regs by year-end as expected (see our prior coverage). They are also worried that the regs will reflect the DOL’s tough stance on valuation issues and that stakeholders may not get a sufficient chance to comment on the proposal. We pointed out that there is supposed to be a two-to-three-month public comment period before the regs are finalized. One individual wondered whether there would be a public hearing. We don’t know whether there will be or not, but the valuation profession would certainly welcome that. Stay tuned!

AI is high on the radar at the AICPA FVS section

One of the eagerly awaited issues for 2024 at the AICPA FVS section is the continued understanding of artificial intelligence and its implications for forensics and valuation practitioners. This point was made during the FVS Forum session at the AICPA & CIMA Forensic and Valuation Services Conference in Las Vegas last week. The session had a panel of FVS section leaders who discussed the section’s five-year strategic plan, which includes several main goals, including building a global FVS community, providing for enhanced education for the FVS professional, and increasing FVS brand awareness and reputation. Other developments the FVS leaders are looking forward to most in 2024 include increased outreach efforts to universities and the Emerging Professionals Project, which will determine the needs of young FVS professionals and how best to satisfy those needs.

More details on the FVS section’s plans will be in the January 2024 issue of Business Valuation Update.

BV firm benchmarking guide for 2023 just released

How does your valuation practice stack up against its peers? Data from over 190 business valuation firms and practices have been collected and distilled into a concise reference guide that focuses on different aspects of practice management and practice building. Sections include: “Practice Performance”; “Staff Hiring, Promotion, Partner Requirements and Compensation”; “Billing and Fees”; and more. BVR partnered with leading BVFLS practice management expert Rod Burkert (Burkert Valuation Advisors) to help ensure the survey and resulting guide will be of the most help to BV practices. You already have access to this guide if you are a subscriber to BVR’s BVResearch Pro platform. If you are not, you can purchase the guide on an a la carte basis if you click here.

BVPro adds new guide on valuing jewelry stores

BVR’s BVResearch Pro platform adds new content continually to its collection of over 20,000 articles, books, special reports, court case digests, webinar transcripts, and more. Just added is a 113-page guide, What It’s Worth: Valuing Jewelry Stores. The guide includes industry intelligence (from Vertical IQ), key benchmarks from DealStats, valuation expert insights, court cases, and rules of thumb from the Business Reference Guide. If you are not a subscriber to BVResearchPro, you can purchase the guide on an a la carte basis if you click here.

Global BV News

IVSC seeks board members

The International Valuation Standards Council (IVSC) is seeking applications for roles on three of its technical standards boards, with two openings on each of the Tangible Assets Board, Business Valuation Board, and Financial Instruments Board. The new board appointees will start their terms in the second quarter of 2024. Applications can be submitted online through the IVSC website, and the closing date for applications is Monday, December 18. For more information, click here.