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Clarifying the Standard of Value

Posted in: Business Damages and Lost Profits, Valuation and Valuation Theory|February 13, 2012

“Standard of Value” is defined in the Glossary of the ASA Business Valuation Standards as: Standard of Value. The identification of the type of value being used in a specific engagement; e.g. fair market value, fair value, investment value. Defining the appropriate standard of value is a critical first step in every business valuation engagement.  […]

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Estate of Shurtz v. Commissioner

Posted in: Gift and Estate Matters, Literature Review, QMDM|February 10, 2012

Estate of Shurtz (T.C. Memo 2010-21) was filed in February 2010, or almost two years ago. On February 24, 2010, the BV Wire, published by Business Valuation Resources, reported on the case in a short article entitled “Mercer Capital (and QMDM) wins discounts in new FLP case.” Background According to the decision, written by Judge Jacobs, […]

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Does the Discount Rate (R) Vary Between Net Income and Net Cash Flow?

Posted in: Valuation and Valuation Theory|January 30, 2012

The following question was recently posed in the Valuation Group (of which I am a member) on LinkedIn: Can a discount rate applicable to net cash flow to equity be applied to net income based solely on the assumption that over the long-run, net income and cash flow should be the same? Someone I know wants to […]

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Statutory Fair Value: Different for Banks and Bank Holding Companies in Iowa

Posted in: Fair Value (Statutory)|January 23, 2012

What is the meaning of fair value in statutory determinations in Iowa?  Well, apparently, it depends, as we learn in Rolfe State Bank v. Gunderson et al (No. 09-0651, Filed February 11, 2011) Rolfe State Bank, an Iowa chartered state bank in Rolfe, Iowa was substantially owned by Dixon Bancshares, Inc.  During 2008, the board […]

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Question re “Mercer Model” for Valuing Illiquid Minority Interests in Tax Pass-Through Entities (QMDM)

Posted in: QMDM, Valuation and Valuation Theory|January 19, 2012

The following question arrived through LinkedIn the other day: I read today in e-article that there’s is a Mercer Model for Pass Through Entities? We have almost every book you’ve written but were unable to find it. I called Mercer Capital and talked to Lisa, she said there is no such model.. I am aware […]

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Fixed Price Buy-Sell Agreement Poster Child (New York)

Posted in: Buy-Sell Agreements|January 12, 2012

DeMatteo Salvage Company, Inc. is a Long Island based, family-owned business since the 1920s, designing and installing machinery and equipment for scrap paper and solid waste customers.  The company had multiple owners who, in this case, were brothers.   DeMatteo Salvage also had a buy-sell agreement which dated back to 1966.  It was a fixed-price agreement, […]

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Statutory Fair Value (Kentucky) – Supreme Court Clarifies Meaning

Posted in: Fair Value (Statutory)|January 10, 2012

The Kentucky Supreme Court recently addressed the state’s law providing shareholders the right to dissent from certain significant corporation actions and to obtain the fair value of their shares.  The case, Shawnee Telecom Resources, Inc. v. Kathy Brown, provides a number of interesting insights into the evolution of statutory fair value in the various states, […]

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Statutory Fair Value (South Dakota): Customer Risk Consideration Is Not a Valuation Discount

Posted in: Buy-Sell Agreements, Fair Value (Statutory)|January 5, 2012

Jay E. Link is the son of John (Jack) Link and the brother of Troy Link.  Jack and Troy ousted Jay from the family business, Link Holding, Inc., L.S.I., Inc., Linked Snacks, etc. (“LSI” or “the Company”) they collectively owned in 2005. A Buy-Sell Agreement There was a buy-sell agreement, which, among other things, granted the […]

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ValuationSpeak 2011 – First Year in Review

Posted in: Uncategorized|January 3, 2012

In 2011, ValuationSpeak was introduced as my personal blog. My first post was written on January 10, 2011.  Since then, we published in 13 categories, as summarized below: As noted in the chart above, two major themes dominated ValuationSpeak in 2011: buy-sell agreements and statutory fair value. Buy-Sell Agreements.  We wrote a great deal about buy-sell agreements.  My […]

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5 Most Popular Posts of 2011

Posted in: The Personal Side|December 29, 2011

Thanks for your readership in 2011. We, like many others this time of year, took some time to look back over the year. The 5 most popular posts for the year were: Rights of First Refusal and Buy-Sell Agreements Statutory Fair Value: #2 Discounted Cash Flow (DCF) Method Damages in a Hypothetical Breach of Contract […]

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Other Books of Interest

Integrated Theory, Second Edition
 

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Whether you are an accountant, auditor, financial planner, or attorney, Business Valuation: An Integrated Theory, Second Edition enables you to understand and correctly apply fundamental valuation concepts. Thoroughly revised and expanded, the Second Edition demystifies modern valuation theory, bringing together various valuation concepts to reveal a comprehensive picture of business valuation.

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The QMDM Companion 4.0
 

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The Quantitative Marketability Discount Model (QMDM) presents a practical model to assist business appraisers in developing, quantifying and defending marketability discounts under the income approach. The model allows you to quickly and easily quantify marketability discounts in the appraisal of minority business interests. The very latest version of the (QMDM) now includes a revised and expanded explanatory manual, delivered as a .zip file* electronically via email.

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About Chris Mercer

Chris Mercer is the CEO of Mercer Capital, a leading independent valuation firm. He has extensive experience in litigation engagements including statutory fair value cases and business damages and lost profits. He is also an expert in buy-sell agreement disputes.

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Disclaimer
The articles, tools, and other material provided on this site are for informational purposes only and are not intended to take the place of professional or legal advice from your accountants, lawyers, business consultants, or other advisors. Please contact your own advisors regarding your particular situation. The opinions expressed on this site are solely those of the author and not those of Mercer Capital.

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