selecting the right valuation expert

1

SELECTING THE RIGHT VALUATION EXPERTVALUATION 2016 SERIES

Premier date: March 18, 2016

Premier Date: March 18, 2016

VALUATION 2016 SERIES

SELECTING THE RIGHT VALUATION EXPERT

© 2016 DailyDAC, LLC d/b/a/ Financial Poise® 2

WE WOULD LIKE TO TAKE THIS OPPORTUNITY TO THANK OUR SPONSORS



meet the facultyPANELISTS

Richard Claywell J. Richard Claywell, CPAMichael Hobbs, SRA, LEED GA PahRoo Appraisal & ConsultancyDan Paulus, MAI RP Valuation Group LLC

MODERATORKevin Lane Crowe Horwath LLP


Practical and entertaining education for business owners and executives, accredited

investors, and their legal and financial advisors. For more information, visit

www.financialpoise.comDISCLAIMER: THE MATERIAL IN THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD

NOT BE CONSIDERED LEGAL ADVICE. YOU SHOULD CONSULT WITH AN ATTORNEY TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.

http://www.financialpoise.com/

© 2016 DailyDAC, LLC d/b/a/ Financial Poise®

about this webinarSelecting the right valuation expert witness can sometime be the most important decision a litigator makes in a case. The expert witness will be the person who helps the jury or judge understand complex valuation matters, and explains how these complex matters fit into the theory of the case. A bad expert witness can lead to confusion – or worse – an opinion that is not accepted by the court. In this webinar, Financial Poise faculty discuss the expert witness due diligence and how to select the right valuation expert.

6

about this series“What is it worth?” A valuation (or appraisal, if you prefer) can be performed on virtually any asset: the equity of a company or options to buy the equity of a company; intangible assets (such as patents and trademarks- or even contingent liabilities); real estate; and any sort of personal property. The concept of valuation permeates the business and legal world for reasons that include investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and litigation, among others. Join some of the leading experts in the country as they discuss- in plain English - the basics and the latest in valuation topics and why valuations of assets can vary so greatly from one professional to another.

As with all Financial Poise webinars, each episode in the series is designed to be viewed independently of the other episodes, and listeners will enhance their knowledge of this area whether they attend one, some, or all of the programs.


episodes in this series

Dates above are premier dates All webinars also available On Demand through West LegalEd Center and Vimeo

EPISODE #1 What’s it Worth: Valuing a Business for Sale1/19/2016

EPISODE #2 Valuing Lost Profits for Litigation Purposes 2/26/2016

EPISODE #3 Selecting the Right Valuation Expert 3/18/2016

EPISODE #4 Valuing Your Brand and Other “Soft” Assets 4/29/2016

EPISODE #5 Bankruptcy Valuation Issues: 5/27/2016Valuation in the Context of a Fraudulent Transfer or Preference Attack


Why Perform a Valuation

Merger or acquisition

Financial Reporting

Tax Compliance

Disputes & Litigation

Consulting & Advisory


FINANCIAL POISE, A DIVISION OF DAILYDAC, LLC10

Who Asks for a Valuation• Who will be the user(s) of the valuation?• Third parties (sometimes reliance, sometimes not)

• Court, attorneys• Investors (maybe employees, maybe not)• Banks (collateral, other financing, solvency)• Trustees (ESOPs, bankruptcy)• Government (tax or other regulatory)• Auditors, tax accountants, tax attorneys

• Is perception of independence/disinterestedness required?• Conflicts of Interest• Prior experience with subject asset


Who Performs Valuations?Business and Intangible Assets

Governing Body

American Society of Appraisers

American Society of Appraisers

Institute of Business Appraisers

American Institute of Certified Public Accountants

National Association of Certified Valuation Analysts

CFA Institute

Professional Designation

ASA - Accredited Senior Appraiser

AM - Accredited Member

CBA - Certified Business Appraiser

ABV - Accredited in Business Valuation

CVA – Certified Valuation Analyst

CFA – Chartered Financial Analyst

Prior Education

College Degree or equivalent


College Degree & 2 yr. post-graduate degrees or equivalent

College Degree or equivalent & CPA designation


College Degree or Equivalent

Coursework

Four, 24-hr society training courses

Four 24-hr society training courses

90 hours classroom or 5 years experience

None 40 hour society training course, exam and case study.

Approx. 900-1200 hours of directed self-study plus three exams over 2-3 years

Experience 5 yr. full time 2 yr. full time 90 classroom hours or 5 yr. full

Involvement in 10 business valuation

2 yrs. or 10 business valuations

4 yr. full time

11© 2016 DailyDAC, LLC d/b/a/ Financial Poise®

Who Performs Valuations? (cont.)Real Estate Lost Profits/Damages Personal

PropertyGoverning Body

Appraisal Institute American Society of Appraisers

NACVA AICPA ACFE American Society of Appraisers

Professional Designation

MAI – Member of the Appraisal InstituteSRA – Senior Residential Appraiser

AM - Accredited MemberASA - Accredited Senior Appraiser

MAFF – Master Analyst in Financial Forensics

CFF – Certified Financial Forensics

CFE – Certified Fraud Examiner

AM - Accredited MemberASA - Accredited Senior Appraiser

Prior Education

MAI - College Degree or equivalentSRA – Associates Degree



College Degree or equivalent and CPA.



Coursework 12 one-week courses & exams, must pass a demonstration report, in-person peer review exam, and a 2-day comprehensive exam

Four, 24-hr society training courses

Training and 4-hour exam

Exam, 75 hours of course work.

Exam Four, 24-hr society training courses

Experience 4,500 hours of specialized work experience

ASA - 5 yr. full timeAM – 2 yr. full time

2,500 hours 1,000 hours 2 Years ASA - 5 yr. full timeAM – 2 yr. full time


ACCREDITING ORGANIZATIONS• Business and Intangible Valuation

• American Institute of CPA’s • American Society of Appraisers• CFA Institute - Chartered

Financial Analyst• Institute of Business Appraisers• National Association of

Certified Valuation Analysts• Real Estate

• Appraisal Institute• American Society of Appraisers• National Association of Master

Appraisers

• National Association of Auctioneers

• Certified Appraisers Guild of America

• Machinery and Equipment, Personal Property, Other Specialty

• American Society of Appraisers• National Association of Master

Appraisers• National Association of

Auctioneers• Certified Appraisers Guild of

America



EXPERT TESTIMONY CONSIDERATIONS

14

Must expert be qualified by court?

What standards must expert follow or meet?

What kind of work product and methodology is expected of expert?

What methodology will expert use?

What care/precautions should lawyer take when preparing and working with expert?

Why are Standards Important?• Daubert and Kumho Tire Cases• A ‘Daubert Challenge’• Four factors to determine Expert

• Theory or technique can be or has been tested,• Theory or technique subjected to peer review,• Potential error rate is determinable or standards exist, and• Theory or technique generally accepted in profession.


Daubert Challenge• Know/apply the standards• Know all the standards• Know the relevant professional

literature• Know the professional

organizations• Use generally accepted

methods• Consider multiple analytical

methods

• Synthesize your conclusion• Support your position• Disclose all analytical

assumptions and variables• Subject the analysis to peer

review• Test the analysis and conclusion

for reasonableness


Independence vs. Advocacy in Litigation

Lawyers are advocates


Professional StandardsUniform Standards of Professional Appraisal Practice (USPAP)American Society of Appraisers – standards by disciplineAmerican Institute of Certified Public Accountants SSVS No. 1National Association of Certified Valuation AnalystsRegulatory Rules & RegulationsStatutory and Jurisdictional RequirementsPrivate Equity Group (PEG)Income Tax Reporting – IRS Revenue Ruling 59-60Financial Reporting - FASB ASC 820; Fair Value MeasurementsContractual standardsOthers?


Standards of ValueMarket Value – real estate financing

Fair Market Value – tax compliance, some litigation & disputes

Fair Value - financial reporting

Statutory Fair Value – some litigation & disputes

Investment Value – investment advice, decision making

Intrinsic Value

What is a “Fairness Opinion?”

What is a “Solvency Opinion?”

The purpose of the valuation determines the standard of value:


More About The Faculty: D

RICHARD [email protected]

Richard is a practicing Certified Public Accountant, and holds the additional designations of Accredited in Business Valuation, Accredited Senior Appraiser, Certified Business Appraiser, International Certified Valuation Specialist, Certified Valuation Analyst, Certified in Merger & Acquisition Advisor, Master Analyst in Financial Forensics, Certified in Fraud Deterrence, Accredited in Business Appraisal Review. Richard has been valuing closely held companies since 1985. Richard’s practice is restricted to business valuation, economic damages, profit enhancement and exit planning.

Richard received his Bachelor of Science in Accounting in 1979 from the University of Houston – Clear Lake. He then received certification as a Public Accountant in 1983. Over the years, Richard has earned additional accreditations that relate to business valuations, economic damages and fraud. Richard has been an instructor for the National Association of Certified Valuation Analysts for many years, has been an instructor for the Internal Revenue Service and the International Association of Consultants Valuators and Analysts (IACVA). Richard is currently the Director of Education for the IACVA and is responsible for the business valuations materials being taught in 55 countries. Richard has taught business valuation or economic damage courses in China, Korea, Taiwan.

Richard has performed over 1,000 business valuations since 1985. Richard has testified in Texas County Court, Texas State Court, Bankruptcy Court and Texas State Courts. Richard has given testimony in economic damages (lost profits), shareholder disputes, personal injury, wrongful termination and divorce.




21

[email protected] HOBBS, SRA, LEED GA

Michael Hobbs is the President of PahRoo Appraisal & Consultancy, a multi-disciplinary real estate appraisal and consulting firm headquartered in Chicago. He holds the SRA designation from the Appraisal Institute, the LEED Green Associate designation from United States Green Building Council (USGBC), RAA designation from the National Association of Realtors. He has qualified as an expert witness before the Federal Bankruptcy Court, United States District Court for the Northern District of Illinois, and State of Illinois Property Tax Appeal Board. For more than two decades, Michael has been employing his energetic style to the industries of Real Estate, Energy Efficiency and Entrepreneurship/Private Equity. Mr. Hobbs has personally completed or reviewed more than 3,000 appraisals, consulting and litigation assignments in matters involving apartment and condominium projects, residential properties, industrial facilities, high-performance and sustainable properties, convenience stores, retail centers, office properties, car washes, special use properties, land development and adaptive reuse projects. He has advised clients on real estate matters in the areas of tax planning and IRS qualifying donations, bankruptcy, tax-deferred exchanges, mergers and acquisitions, liquidation, property tax assessment appeal, relocation, divorce and estate disputes. Mr. Hobbs earned his Bachelor of Business Administration from the University of Notre Dame. He is an instructor, author, and national speaker. He is a board member of The Entrepreneur Organization (EO) Chicago Chapter and REIA Chicago; he is a member of TMA, CCIM, RAC, and CREC.



DAN [email protected]

Dan Paulus, MAI specializes in solving complex commercial real estate (“CRE”) problems through focused consulting or real property valuation complying with USPAP and/or UASFLA. He is experienced in business and staff management, marketing, strategic planning, and the management of complex engagements. He is a veteran in the appraisal or review of both single and multiple asset properties and large multi-state portfolios. He has extensive experience in market and statistical analysis, land use, and market and feasibility studies.

Throughout a 33 year career, Dan has been engaged by HUD, FHA, BIA, SBA, developers, lenders, and portfolio management firms, Special Servicers, mortgage bankers, accounting and law firms. He has supervised numerous multi- discipline, multi-state engagements for lenders, law and accounting firms, insurance companies and other corporate clients. He has extensive financial accounting related experience with purchase price allocation (ASC 805) teaming and coordinating with going-concern and tangible personal property experts, and also with marketability and minority interest discounting experts.

Dan is a seasoned dispute analyst, litigation and strategy consultant, and expert witness in deposition, trial and arbitration. He has testified as an expert at the Department of Justice (Washington, D.C.), U.S. Court of Federal Claims, U.S. Tax Court, and provided direct testimony in IRS mediation and Department of the Interior arbitration. He assists lawyers, their clients, and other experts interpret pertinent issues pre and post-Discovery regarding a disputed valuation or potential damages. He assists in evaluating witnesses and issues on both sides of litigation, researching and providing evidence, and truth testing ‘evidence’ and assertions through forensic analysis.

22

More About The Faculty:KEVIN LANE

D

[email protected]

Kevin is an accomplished financial professional with over 15 years of experience in private equity and consulting leadership positions. He has led and performed dozens of valuation assignments, including the valuation of small and medium size businesses, intellectual properties, joint ventures, and emerging technologies for a variety of purposes including litigation, technology commercialization, mergers and acquisitions, and tax planning. He currently leads Crowe Horwath’s outsourced corporate development practice.

Kevin has provided expert accounting and valuation testimony, prepared expert reports and analyses, and scrutinized the work of opposing experts related to economic damages in complex commercial litigation matters - testimony venues have included Federal District Court, American Arbitration Association, and formal mediation

Having spent almost three years in the private equity industry, Kevin is also experienced in all aspects of the investment process, including financial modeling, evaluating investment opportunities, performing due diligence, negotiating transactions, and obtaining financing. Kevin has been a guest lecturer at The John Marshall Law School and Loyola University Chicago School of Law on topics including accounting for business combinations, intellectual property valuation and taxation, and economic damages.

Kevin is a Certified Public Accountant (CPA) Accredited in Business Valuation (ABV). He holds a Bachelor of Business Administration, Accountancy and Computer Applications from the University of Notre Dame and a Masters in Business Administration, concentrations in Finance and Economics, from the University of Chicago Booth School of Business. © 2016 DailyDAC, LLC d/b/a/ Financial Poise® 23

Visit www.eisneramper.comEisnerAmper. Let's Get Down to Business®

EisnerAmper LLP is a leading full-service advisory and accounting firm, and is among the largest in the United States. We provide audit, accounting, and tax services, as well as corporate finance, internal audit and risk management, litigation services, consulting, private business services, employee

benefit plan audits, forensic accounting, and other professional advisory services to a broad range of clients across many industries. We work with high net worth individuals, family offices, closely held businesses, start-ups, middle market and Fortune 500 companies. EisnerAmper is PCAOB-registered and provides services to more than 200 public companies and to thousands of entities spanning the hedge, private equity, brokerage and insurance

space in the financial services marketplace. As companies grow we help them reach their goals every step of the way. With offices in New York (NY), New Jersey (NJ), Pennsylvania (PA), California (CA), and the Cayman Islands, and as an independent member of Allinial

Global, EisnerAmper serves clients worldwide.


http://www.eisneramper.com/


www.financialpoisewebinars.com

http://www.financialpoisewebinars.com/


50,000 +Weekly

newslettersubscribers

15,000 +website Visitors

per month

10,000 +webinar

attendees per year

business owners & executives

Attorneys Accountants Bankers Business brokers Consultants Commercial lenders debt traders Developers Entrepreneurs

high net worth investors

27


http://www.accreditedinvestormarkets.com/

http://commercialbankruptcyalternatives.com/

http://commercialbankruptcyinvestor.com/

http://commercialbankruptcylitigation.com/

http://www.businesstransitionandexitplanning.com/

http://www.chamberwise.org/

http://www.dailydac.com/


50,000+ WEEKLY NEWSLETTER SUBSCRIBERS15,000+ MONTHLY WEBSITE VISITORS10,000+ YEARLY WEBINAR ATTENDEES

PODCASTS, E-BOOKS AND MORE

educating various constituents

about risks & rewards involving financially

distressed businesses

educating investors

about optionsbeyond

publicly traded securities

educating business owners

& executives

28


http://www.dailydac.com/

http://commercialbankruptcylitigation.com/

http://commercialbankruptcyalternatives.com/

http://www.commercialbankruptcyinvestor.com/

http://www.businesstransitionandexitplanning.com/



http://www.aimkts.com/




About Financial Poise™ DailyDAC, LLC, d/b/a Financial Poise™ provides continuing education to business owners and executives, investors, and their respective trusted

advisors. Its websites, webinars, and books provide Plain English, sometimes entertaining, explanations about legal, financial, and other

subjects of interest to these audiences.


The ChamberWise™ Education Consortium is a resource for Chambers of Commerce to provide its members with valuable

member benefits by offering relevant business education webinars; and generate revenue for the Chamber as well.

www.chamberwise.org



Important Notes

• THE MATERIAL IN THIS PRESENTATION IS FOR GENERAL EDUCATIONAL PURPOSES ONLY.

• IT SHOULD NOT BE CONSIDERED LEGAL, INVESTMENT, FINANCIAL, OR ANY OTHER TYPE OF ADVICE ON WHICH YOU SHOULD RELY.

• YOU SHOULD CONSULT WITH AN APPROPRIATE PROFESSIONAL ADVISOR TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.