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   The International Association of Certified Valuation Specialists

Valuation News Updates

09-02-2022 19:14 | Lisa Guo (Administrator)

Willamette points up practice opportunity regarding property taxes

Tax assessors sometimes improperly inflate ad valorem property tax bills on industrial and commercial properties by including the value of the taxpayer’s intangible assets, which are not subject to property taxes in some jurisdictions. An article in the just-released Winter 2022 issue of Insights from Willamette Management Associates discusses this and summarizes the generally accepted approaches and methods related to the valuation of taxpayer intellectual property. In particular, the article focuses on the market approach—and the relief from royalty (RFR) method—related to the valuation of the taxpayer’s intellectual property. The article, “Intellectual Property Valuations for Property Tax Purposes,” was written by Barry W. Purnell, Robert F. Reilly, and Charlene M. Blalock.

What to do: Examine your local area to see whether the laws exempt certain intangible assets from commercial property taxes. You may have clients who have overpaid their property taxes if the value of intangibles was improperly included in the assessment.

Damages expert dodges exclusion bullet

In a patent infringement case in Tennessee, the defendants filed a motion to exclude the testimony of the damages expert for the plaintiffs. The product in question was medical technology used during surgery. Among the arguments for exclusion was that the expert failed to offer reliable testimony to meet his “but for causality” burden for lost profits damages. They also challenged his reasonable royalty rate. The plaintiffs contended that the expert had a reliable foundation for his opinions and any issues the defendants had should be dealt with during cross-examination and not exclusion. The defendants’ motion was denied, and the expert’s testimony was not excluded.

The case is Xodus Med. v. Prime Med. (II), 2021 U.S. Dist. LEXIS 240473, and a case analysis and full court opinion can be found on the BVLaw platform.

Extra: Get a recap of the most notable valuation-related court cases during a February 15 webinar, BVLaw Case Update, hosted by Jim Alerding, who will be joined by fellow valuer Jim Ewart and attorney Andrew Z. Soshnick.

Year-end 2021 data now in the Cost of Capital Professional

Year-end 2021 data, including equity risk premia, CRSP decile size premia, and industry betas/IRPs, are now available in BVR’s Cost of Capital Professional platform. The platform is a simple, transparent, and cost-effective service for estimating the cost of capital and is designed to bring more professional judgment and common sense back into the process, which has become too much of a complex “black box” of applied mathematics. It supports the buildup method and CAPM calculations for any valuation date. It also gives you the flexibility to choose the start year for historical return data based on what segment of history you believe best offers a reasonable basis to make estimates of expected future returns. For a personalized demo of the platform, click here.

New book on valuing fractional interests

For almost 25 years, valuing fractional interests involving real estate has been the specialty of Dennis A. Webb (Primus Valuations). He is a real estate appraiser as well as a business valuation expert, and he has updated his approach, which is explained in his new book, Valuing Fractional Interests in Real Estate 2.0. The approach relies primarily on income methods using public limited partnership and REIT market returns. He presents the updated methodology by examining the methods in use today and understanding how and why they are replaced by or used in the new approach. He also stresses the importance of telling the story behind the valuation that makes sense to the user of your report. Webb also has developed a new online application, the Partner Value Expert (PVX), that embodies his new approach.

Global BV News

European goodwill impairment up 49% in 2020

Total goodwill impairment recorded by European-listed companies in the STOXX® Europe 600 increased for the third consecutive year, rising 49%, to €54.1 billion (bn) in 2020, according to the “2021 European Goodwill Impairment Study,” from Kroll. Spain had the highest aggregate amount of goodwill impairment in 2020, followed by the United Kingdom. Overall, the top three industries with the most significant increase in goodwill impairment amounts in 2020 are (in order of magnitude): financials and real estate, materials, and communications services

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