Business Valuation and Financial Litigation—How to Do It: From Foundations to Advanced

New Tool for Navigating the Cost of Capital

Wednesday, June 20
10:10 a.m.–11:50 a.m.
2 hours CPE (2 Finance)
Duff & Phelps is moving its Valuation Handbook book and data to a digital platform—the Duff & Phelps Cost of Capital Navigator. The Navigator will assist users in better developing a defensible cost of capital estimate. In 2018, the first version of the Navigator will replace the Valuation Handbook—U.S. Guide to Cost of Capital. Data on industry risk premia and size premias will only be available through the Navigator.

In this session the presenter will walk thru application of the Navigator and discuss enhancements coming in upcoming versions.

Learning Objectives:

After completing this session, attendees will be able to:

• Use the new Duff & Phelps Cost of Capital Navigator, a digital platform that replaces the Valuation Handbook-U.S. Guide to Cost of Capital in 2018, to its full potential. The Navigator will allow users to obtain up-to- date estimates of Industry Risk Premia and better match their size and risk premias to the characteristics of their subject company.
• Identify how to be more proficient in using the Navigator and better equipped to build defensible cost of capital estimates.

Who Should Attend:

Valuation practitioners, corporate executives, and staff charged with building cost of capital estimates, CPAs, attorneys who deal with valuation matters.

Program Level and Prerequisites:

Update: Learning activity level that provides a general review of new developments.

Advanced Preparation:

None

Roger Grabowski

Roger  Grabowski

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Modeling and Discounting Damages—Ten Challenging Questions and Answers

Wednesday, June 20
10:10 a.m.–11:50 a.m.
2 hours CPE (2 Finance)
An exploration of using a discount rate to address and adjust for a variety of important considerations in computing lost profits and lost business value damages, including hoped-for or optimistic outcome projections, achievement risk in expected outcome projections, before-tax vs. after-tax models, and the potential taxability of the damages award.

Learning Objectives:

After completing this session, attendees will be able to:

• Identify the advantages and disadvantages of addressing achievement risk through the discount rate versus within the undiscounted projection (e.g., spreadsheet model)
• Describe the behavior of a discount rate over the full extent of the damages period compared to period by period within the damages time frame
• List how to avoid mistakes in developing a discount rate for a before-tax vs. after-tax projection model when the corresponding objective is to compute either a before-tax or after-tax damages award

Who Should Attend:

Valuation practitioners who are aware of WACC.

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

None

Everett P. Harry

Everett P.  Harry

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Profit Apportionment—Determining the Contribution of IP in Valuations and Damages Calculations

Wednesday, June 20
12:50 p.m.–1:40 p.m.
1 hour CPE (1 Finance)
Valuation and damages analysts are frequently asked to not only assess the value of businesses, but provide a calculation of the impact provided by the trademarks, patents, copyrights, brands, and intangibles used by these businesses. As any one type of intangible asset can contribute only a portion of the business’s total earnings, a profit apportionment analysis is required to either value the asset or calculate damages in IP infringement litigation. The analytical framework presented will offer a set of tools to consistently and convincingly develop profit apportionment analyses. The session will present the framework and provide case studies for applying the framework in valuation and damages calculation assignments.

Learning Objectives:

After completing this session, attendees will be able to:

• Identify how to apportion a company’s profits in order to value IP assets or calculation damages in IP litigation
• Communicate profit apportionment opinions consistently and convincingly
• Present the benefits of employing a profit apportionment analysis in strategic consulting assignments

Who Should Attend:

Accountants, consultants, and other valuation professionals who encounter issues related to the value of patents, trademarks, copyrights, and trade secrets will gain a greater understanding of the analysis required to apportion profits to IP assets. Damages experts will be offered a framework for consistently and clearly communicating profit apportionment opinions. Trusted advisers to business owners and executives will gain a greater understanding of the contribution of IP to financial performance.

Program Level and Prerequisites:

Advanced: Learning activity level most useful for individuals with mastery of the particular topic. This level focuses on the development of in-depth knowledge, a variety of skills, or a broader range of applications.

Advanced Preparation:

This session will present a framework for conducting profit apportionment analyses: a required component of IP valuation and damages calculations in IP infringement litigation. The framework offered allows consistent evaluation of the financial contribut

Brian Buss

Brian  Buss

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Is That All it's Worth? Consulting Opportunities in Helping Clients to a Higher Value

Wednesday, June 20
12:50 p.m.–1:40 p.m.
1 hour CPE (1 Business Management & Organization)
Professional valuation analysts examine companies inside and out in determining what their company may bring in the marketplace. But the Certified Valuation Analyst (CVA) must give the value that the company is worth right now. What happens if that value just is too low for the seller? With the recently gained knowledge from following professional valuation standards, the CVA is in a uniquely qualified and timely position to now provide executive consulting to grow the client's value. Topics that CVAs can coach their clients on include: creating non-financial managers' buy-in on budgeting and forecast variances; analyzing EBITDA and Free Cash Flow by line of business; Contribution Margin Analysis to assist in maximizing profits through variable cost controls and pricing.

Learning Objectives:

After completing this session, attendees will be able to:

• Teach clients and their senior management team how to budget in a non-threatening environment
• Help clients develop a monthly forecast reporting system to compare monthly system allowing even non-financial executives to understand variance reporting in a meaningful way of knowing "what's left"
• Identify how to go beyond Gross Profit analysis and to assist clients in calculating the Contribution Margins for incremental sales and profit analysis—determining which areas of their business brings in highest profits
• Describe how to set client mindset of "you get what you measure" by setting profit and operational goals and tracking results to management goals
• Work with client business and marketing plan to "match the narrative with the numbers" to best attain financial investors and loans
• Identify how outcome is to determine for client if maximum value is received at the improved enterprise level or greater value of the sum of individual division level

Who Should Attend:

CPAs, valuation practitioners, CEOs

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

None

Mark Sabo

Mark  Sabo

Read Biography

Option Pricing-based Models to Calculate DLOMs

Wednesday, June 20
2:00 p.m.–2:50 p.m.
1 hour CPE (1 Economics)
This session will cover the various OPM-based DLOM Models, including the Chaffee, Longstaff, Finnerty, and Asian Look-back models. It will discuss the characteristics of the models and compare the models with one another and show how to calculate them. This session will also discuss the limitations of the models and situations for which they are suited. It will give a case analysis to provide clear examples of how the models work and compare in actual use and will also compare the results to discounts observed in the market.

Learning Objectives:

After completing this session, attendees will be able to:

• Define the various OPM-based DLOM models
• Compare the OPM-based DLOM models
• Describe when to apply the models
• List the limitations of the models

Who Should Attend:

Business valuators, CPAs, attorneys.

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

None

Vincent Covrig

Vincent  Covrig

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Daniel McConaughy

Daniel  McConaughy

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Calculating the Business Interruption Claim

Wednesday, June 20
2:00 p.m.–2:50 p.m.
1 hour CPE (1 Accounting)
The insured has located his or her business interruption (BI) policy and gathered all the documents necessary to make his or her claim. Now what? Being able to sort through all the information available to cull it down to the necessary information needed to calculate the claim can be difficult. This session will educate the insured on how to calculate, present, and support his or her claim for a business interruption loss, as well as present to the insurer.

Learning Objectives:

After completing this session, attendees will be able to:

• Perform a BI calculation and present the insured's BI claim
• Explain the components of the insured's BI calculation/claim
• Point to the BI policy language to support the BI calculation/claim

Who Should Attend:

Valuation consultants, CPAs, business owners, and attorneys.

Program Level and Prerequisites:

Overview: Learning activity level that provides a general review of a subject area from a broad perspective.

Advanced Preparation:

None

Kerrie Merrifield

Kerrie  Merrifield

Read Biography

Is That All it's Worth? Consulting Opportunities in Helping Clients to a Higher Value

Wednesday, June 20
2:00 p.m.–2:50 p.m.
1 hour CPE (1 Business Management & Organization)
Professional valuation analysts examine companies inside and out in determining what their company may bring in the marketplace. But the Certified Valuation Analyst (CVA) must give the value that the company is worth right now. What happens if that value just is too low for the seller? With the recently gained knowledge from following professional valuation standards, the CVA is in a uniquely qualified and timely position to now provide executive consulting to grow the client's value. Topics that CVAs can coach their clients on include: creating non-financial managers' buy-in on budgeting and forecast variances; analyzing EBITDA and Free Cash Flow by line of business; Contribution Margin Analysis to assist in maximizing profits through variable cost controls and pricing.

Learning Objectives:

After completing this session, attendees will be able to:

• Teach clients and their senior management team how to budget in a non-threatening environment
• Help clients develop a monthly forecast reporting system to compare monthly system allowing even non-financial executives to understand variance reporting in a meaningful way of knowing "what's left"
• Identify how to go beyond Gross Profit analysis and to assist clients in calculating the Contribution Margins for incremental sales and profit analysis—determining which areas of their business brings in highest profits
• Describe how to set client mindset of "you get what you measure" by setting profit and operational goals and tracking results to management goals
• Work with client business and marketing plan to "match the narrative with the numbers" to best attain financial investors and loans
• Identify how outcome is to determine for client if maximum value is received at the improved enterprise level or greater value of the sum of individual division level

Who Should Attend:

CPAs, valuation practitioners, CEOs

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

None

Mark Sabo

Mark  Sabo

Read Biography

Using Regression Analysis in the Market Approach (GCTM)

Wednesday, June 20
3:10 p.m.–4:50 p.m.
2 hours CPE (1 Production, 1 Computer Software & Applications)
The attendees will learn how to use Excel's regression analysis and to apply it to Market Approach methodologies. Learn how regression analysis can filter a sample of comparables to statistically identify outliers that are skewing one's data significantly. Attendees will be shown how to use regression to statistically predict the proper revenue multiplier and cash flow multiplier for the subject, thus, eliminating the messy subjective selection process. Learn why every appraiser makes a critical error when he selects the upper or lower quartile or standard deviation of the multipliers to apply to his Subject Company.

A template will be provided that one can use to apply all the regression methodologies learned.

Learning Objectives:

After completing this session, attendees will be able to:

• Describe how regression analysis will put one's GCTM Market Approach on a scientifically sound footing
• Identify how this statistical tool can eliminate the embarrassingly huge differences in values that typically occur when using current methodologies to calculate the revenue and cash flow multipliers
• Describe how using the basic data from Pratt's Stats or Bizcomps, one will be able to statistically predict the appropriate multipliers for the subject company
• State how the challenges to their selection process for multipliers will be eliminated and no more huge gaps between multiplier values

Who Should Attend:

Business appraisal practitioners.

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

None

Fred Hall

Fred  Hall

Read Biography

Introduction to Lost Profits—An Overview of Methodology, Discounting, and How They Work in Real Life

Wednesday, June 20
3:10 p.m.–4:50 p.m.
2 hours CPE ()
This session will provide an introduction to estimating lost profits for those considering expanding their practice into this area. It will discuss methods for examining lost profits (before and after, yardstick, but for) and whether to adjust data provided by the damaged business. The section on discounting future losses to present value will address the divide among experts for determining the appropriate discount rate. All of these discussions will be framed by the three standards set by the courts; foreseeability, proximate cause, reasonable certainty. The session will include case studies exploring practical applications for estimating lost profits that have been accepted in federal and state courts.

Learning Objectives:

After completing this session, attendees will be able to:

• Describe how regression analysis will put one's GCTM Market Approach on a scientifically sound footing
• Identify how this statistical tool can eliminate the embarrassingly huge differences in values that typically occur when using current methodologies to calculate the revenue and cash flow multipliers
• Describe how using the basic data from Pratt's Stats or Bizcomps, one will be able to statistically predict the appropriate multipliers for the subject company
• State how the challenges to their selection process for multipliers will be eliminated and no more huge gaps between multiplier values

Who Should Attend:

Business appraisal practitioners.

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

None

Allyn Needham

Allyn   Needham

Read Biography

WACC—Wacky or Necessary?

Thursday, June 21
10:10 a.m.–11:50 a.m.
2 hours CPE (2 Finance)
This session will be a discussion about the relevance and applicability of the Weighted Average Cost of Capital (WACC) to the valuation of closely held businesses. There will be a practical presentation explaining the theory and application of the WACC. On that foundation, the presenters will offer opposing opinions regarding what circumstances make the WACC useful vs useless. Examples will be given of the application of WACC including common errors, traps, tricks, and shortcuts. It will be a lively, but friendly, debate on the utilization of WACC to determine the risk rate.

Learning Objectives:

After completing this session, attendees will be able to:

• Explain and defend the use of WACC
• Evaluate the application of the method by other (opposing) experts
• Assess whether the use of WACC is appropriate
• Avoid common mistakes and traps inherent in the use of WACC

Who Should Attend:

Valuation practitioners who are aware of WACC.

Program Level and Prerequisites:

Basic: Learning activity level most beneficial to individuals new to a skill or an attribute.

Advanced Preparation:

None

Chris Hamilton

Chris  Hamilton

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Mark Kucik

Mark  Kucik

Read Biography

Rebuttal Reports—To Be or Not to Be

Thursday, June 21
10:10 a.m.–11:50 a.m.
2 hours CPE ()
This session will focus on the how’s and why’s (or the why not’s) of writing and presenting a rebuttal report. The attendee will gain a better understanding of knowing when to hold em and know when to fold em in the world of report writing. Real life examples and lawyers’ comments will be utilized within the session.

Learning Objectives:

After completing this session, attendees will be able to:

• Information forthcoming

Who Should Attend:

Practitioners, anyone looking to gain knowledge about this topic.

Program Level and Prerequisites:

Basic: Learning activity level most beneficial to individuals new to a skill or an attribute.

Advanced Preparation:

None

Howard Zandman

Howard  Zandman

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Valuing a Business via the Modified Capital Asset Pricing Model Incorporating Monte Carlo Simulation

Thursday, June 21
12:50 p.m.–1:40 p.m.
1 hour CPE (1 Statistics)
This session will include connecting Monte Carlo Simulation and the Central Limit Theorem and therewith address the issues of shape selection and number of iterations to specify.

Learning Objectives:

After completing this session, attendees will be able to:

• Identify how to model the Modified Capital Asset Pricing Model employing Monte Carlo Simulation

Who Should Attend:

All who prepare or litigate business appraisal reports.

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

A basic understanding of the Central Limit Theorem will be helpful but not essential.

Toby Tatum

Toby  Tatum

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Rick Gray

Rick  Gray

Read Biography

Can Insolvency and Lost Profits Coexist?

Thursday, June 21
12:50 p.m.–1:40 p.m.
1 hour CPE (1 Accounting)
The asserted acts of the defendant need to be the proximate cause of asserted plaintiff's lost profits. If the plaintiff is insolvent at the time of the asserted defendant acts, can the proximate cause be proven with reasonable certainty. The presenter will discuss/define solvency and what role insolvency may play in lost profits litigation. He will discuss the issue from the viewpoint of both the plaintiff and defendant expert.

Learning Objectives:

After completing this session, attendees will be able to:

• Identify circumstances where insolvency may exist and impair lost profits causation
• Apply the different definitions of solvency to the case fact pattern
• Develop an effective rebuttal to assertions of insolvency
• Describe the importance of credible analysis and testimony

Who Should Attend:

CPAs, attorneys, practitioners

Program Level and Prerequisites:

Overview: Learning activity level that provides a general review of a subject area from a broad perspective.

Advanced Preparation:

Some understanding of intangible asset valuation as well as lost profits calculations and requirements.

P Dermot ONeill

P Dermot  ONeill

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When Values Collide—Business vs. Real Estate Value

Thursday, June 21
2:00 p.m.–2:50 p.m.
1 hour CPE (1 Economics)
This session will discuss the issues related to business value and appraised real estate values used in the business appraisal process. The focus will be on (1) the importance of understanding the impact real estate can have on the business value; (2) illustrating methods to estimate fair rent for one's subject business; and (3) illustrating/reconciling the value collision through a case study.

Learning Objectives:

After completing this session, attendees will be able to:

• Identify potential inconsistencies between their business values and real estate appraised values
• Describe the impact real estate may have on the business value
• Describe methods a business appraiser can use to estimate fair rent
• Explain to clients why their business value may be diminished by the real estate they own

Who Should Attend:

Business valuation and M&A professionals looking to better understand and communicate the impact real estate has on the business value; CPAs and attorneys who want to increase their understanding of some key concepts in valuing businesses.

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

Minimum: basic understanding of business valuation principles.

Steven Egna

Steven  Egna

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Opposing Experts without Standards—What to Expect and How to Challenge Them

Thursday, June 21
2:00 p.m.–2:50 p.m.
1 hour CPE (1 Accounting)
Business valuation professionals often find themselves drawn into disputes over the value of business interests. Minority and oppressed shareholder disputes, damage to business value, eminent domain, and failed business combinations are some of these situations calling for the expertise of the seasoned business valuation analyst.

In this session, attendees will expand their knowledge of professional standards and focus on developmental and reporting standards as they apply under court rules and procedures. The session will cover tips and techniques to employ when reviewing the opposing expert's report, why a critique of the opposing expert may not be enough, and what to do when the opposing expert is bound by different standards.

Learning Objectives:

After completing this session, attendees will be able to:

• Identify standards of value and approaches peculiar to shareholder disputes and other related litigation-based valuations
• Explain professional standards governing business valuation experts in litigation engagements
• Apply professional standards in the litigation environment
• Identify the weaknesses of valuation reports in the litigation environment
• List principles of effective communication in litigation

Who Should Attend:

CPAs, valuation experts, economists, and other financial professionals who render services designed to assist in the resolution of legal disputes involving financial matters.

Program Level and Prerequisites:

Overview: Learning activity level that provides a general review of a subject area from a broad perspective.

Advanced Preparation:

None

P Dermot ONeill

P Dermot  ONeill

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Normalizing Owner Compensation in Business Valuations

Thursday, June 21
3:10 p.m.–4:50 p.m.
2 hours CPE (2 Accounting)
This session explains the accepted methodologies for determining normalized compensation amounts for business owners and their relatives. It includes practical tips and recommendations for improving efficiency, documenting analyses, avoiding common mistakes, and drawing defensible conclusions. The presenter will identify the strengths and weaknesses of three popular sources of compensation comparability data. A case study is included.

Learning Objectives:

After completing this session, attendees will be able to:

• Explain the accepted methodologies for normalizing owner compensation
• Differentiate between sources of compensation comparability data
• Prepare clear analyses of compensation adjustments
• Defend their conclusions on these important and sensitive normalizing adjustments

Who Should Attend:

CVAs and other business valuation professionals (regardless of their level of experience), and anyone who may assist with marital dissolution, shareholder disputes over compensation, or IRS audits of reasonable compensation.

Program Level and Prerequisites:

Intermediate: Learning activity level that builds on a basic program most appropriate for individuals with detailed knowledge in an area.

Advanced Preparation:

None

Stephen Kirkland

Stephen  Kirkland

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WACC—Wacky or Necessary?

Thursday, June 21
3:10 p.m.–4:50 p.m.
2 hours CPE (2 Finance)
This session will be a discussion about the relevance and applicability of the Weighted Average Cost of Capital (WACC) to the valuation of closely held businesses. There will be a practical presentation explaining the theory and application of the WACC. On that foundation, the presenters will offer opposing opinions regarding what circumstances make the WACC useful vs useless. Examples will be given of the application of WACC including common errors, traps, tricks, and shortcuts. It will be a lively, but friendly, debate on the utilization of WACC to determine the risk rate.

Learning Objectives:

After completing this session, attendees will be able to:

• Explain and defend the use of WACC
• Evaluate the application of the method by other (opposing) experts
• Assess whether the use of WACC is appropriate
• Avoid common mistakes and traps inherent in the use of WACC

Who Should Attend:

Valuation practitioners who are aware of WACC.

Program Level and Prerequisites:

Basic: Learning activity level most beneficial to individuals new to a skill or an attribute.

Advanced Preparation:

None

Chris Hamilton

Chris  Hamilton

Read Biography

Mark Kucik

Mark  Kucik

Read Biography

Forensic Asymmetry to Dominate Opposition

Thursday, June 21
3:10 p.m.–4:50 p.m.
2 hours CPE (2 Finance)
This session gives business professionals immediately usable tools and techniques for their two primary decision categories: people & money and one secondary decision factor: patterns. The session stresses tactical practicality and delivers actual case examples.

Competent forensic operators know the financial forensics doctrine implies two principles espoused by the definition: “The art & science of investigating people & money©”. Patterns reflect the inherent relationships between “people & money.” Patterns are ubiquitous within forensic assignments and transcend financial data and comprise virtually any kind of data.

Financial (money) analysis is structured via self-reported, tax return, and attest statements. Forensic techniques demonstrate whether the content demonstrates “veracity or mendacity.” They include APD (aberrant pattern detection), accrual/cash anomalies, digital/statistical analysis, and word “quantification” via forensic lexicology.

People analysis is structured via facial mapping and behavior detection. They are both delivered via the forensic technique known as CICO (Concentric In-Concentric Out). CICO recognizes that behavior detection comprises anything and everything that might represent a cause or effect of a subject’s behavior.

Pattern analysis is structured via data recognition and anomalous indicators.

Attendees will leave the session armed with immediately applicable tools and will be positioned to continue adding to their practice repertoire. Attendees can elect to apply up to one hour of the instructor’s time (courtesy) to a current assignment, subject to conflict resolution. The election expires 30 days after the session.

Learning Objectives:

After completing this session, attendees will be able to:

• Identify tactical techniques not available elsewhere
• Articulate how they gained intuitive insight into opposition perspectives

Who Should Attend:

Anyone seeking uncommon knowledge

Program Level and Prerequisites:

Advanced: Learning activity level most useful for individuals with mastery of the particular topic. This level focuses on the development of in-depth knowledge, a variety of skills, or a broader range of applications.

Advanced Preparation:

None

Darrell Dorrell

Darrell  Dorrell

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