Below is the foreword I wrote for the new book A Reviewer’s Handbook to Business Valuation: Practical Guidance to the Use and Abuse of a Business Appraisal (Wiley, 2011) by L. Paul Hood, Jr. and Timothy R. Lee, ASA. It is a much needed book for both business appraisers and users of business appraisal reports.
With over 30 years in the business valuation profession, I have observed the development of and hopefully contributed to the intellectual capital of this profession. The books I have written and those of my colleagues have traditionally been technical in nature, focusing on either business valuation theory in general or on a specific issue within that theory. The majority of these books have been intended for an audience comprised of fellow business appraisers.
What has been missing is a practical book for users of business valuations. A Reviewer’s Handbook to Business Valuation is that book.
The book is co-authored by L. Paul Hood, Jr., a former tax attorney, and Timothy R. Lee, ASA, a business valuation professional and colleague whom I have been privileged to work with for 17 years at Mercer Capital.
Paul is extremely knowledgeable about business valuation in general and experienced in working with numerous business valuation firms on behalf of clients. He brings his unique perspective as an attorney and user of business valuation services to this material.
Paul authored Part III, Lessons from the Trenches, which is a true resource for all users of business valuation reports. In this section, he details, from his vantage point, alleged errors of omission and commission by appraisers. He walks the reader through ten burning issues that business appraisers grapple with and rounds out the section with a chapter entitled “Practical Tips and Traps.” Because many of the readers of this book will be attorneys, this section contains copious case law citations. This section alone is worth the price of the book.
Tim authored Part I, Foundations: Valuing a Business. This section is not designed to be a comprehensive tome on business valuation theory, but rather a practical overview for users of business valuation reports. Before a reviewer of a business valuation report can begin to question, he or she must have a basic understanding of how a business is valued. Tim took on that task with great enthusiasm and deserves praise because of the difficulty involved in distilling what is often complex into something readable and understandable. There have been books of 1,000+ pages written on the topic of valuing a business. Tim walks the reader through the process in a measured and understandable fashion.
Both authors collaborated on Part II, Business Valuation Standards by providing practical commentary on the Standards themselves. In addition, the book contains helpful checklists and other resources that make it indispensable for the reader.
Together, Paul and Tim have tackled what so many have talked about for years but have been either unable or unwilling to do—present basic valuation theory along with practical lessons and tips to aid users of business valuation reports make sense of the report. A Reviewer’s Handbook to Business Valuation is a welcome addition to the business valuation profession.
For more information or to order your copy, see the website for the book.