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   The International Association of Certified Valuation Specialists

Business Valuation Updates

31-08-2022 19:48 | Lisa Guo (Administrator)

Expert’s testimony excluded regarding licensing tattoos to video games

In a copyright infringement case in federal court in Ohio, a tattoo artist sued a video game company for depicting NBA players adorned with his copyrighted tattoos. The defendants argued that their use of the tattoos fell under the “fair use” rules, but the court noted that one of the factors to be considered was the “effect of the use upon the potential market for or value of the copyrighted work.” There were currently no incidences of tattoo artists licensing their designs for video games. The plaintiff brought in an expert from a large global consulting firm who was to testify on various matters, including whether the defendants benefited financially from reproduction of the tattoo designs. The expert was also to testify as to the likelihood of new markets forming, but, in a Daubert challenge, the court ruled that he was outside his area of expertise when he opined about the inevitable potential market for the licensing of tattoos for video games. The court excluded any testimony by the expert in regard to that but allowed his testimony on other matters.

The case is Hayden v. 2k Games, Inc., 2022 U.S. Dist. LEXIS 139184, and a case analysis and full opinion are available on the BVLaw platform.

SME transaction values drop to 2.9x for 2Q2022

EBITDA multiples are at 2.9x for the second quarter of 2022, which is down from the 4.5x rate in the first quarter of 2022, according to the latest issue of the DealStats Value Index (DVI). The DVI calculates valuation multiples and profit margins from closely held companies each quarter, as shown in the chart below, which also highlights the median selling price/EBITDA with the trailing three-quarter average over a five-year period.

Car dealer blue-sky values remain at record levels, per Haig report

“Blue sky” values are 6% higher than at the end of 2021, and they are at the same level as they were at the end of the first quarter of 2022, according to the Q2 2022 Haig Report. Blue-sky value represents the intangible value of a car dealership. A blue-sky multiple is applied to normalized earnings, and then the tangible net assets are added in to get the fair market value of the entire enterprise.

Profitable road: Despite bad news in the economy and weak consumer sentiment, auto dealer profits remained high but growth in profits may be leveling off. M&A activity boomed in the first half of 2022, with 3% more dealerships sold compared to the record-setting pace of the first half of 2021. In these current conditions, a new risk has emerged: Car makers see a chance to restructure the relationship between consumers, retailers, and themselves. To stave this off, dealers will need to stress the value they bring to consumers and the car makers, says the report. To download the full report, click here.

Extra: Join Alan Haig and Nate Klebacha from Haig Partners for a BVR webinar, Auto Dealerships Are Running Hot: Key Valuation Metrics Unique to Auto Dealers, on September 14.

Global BV News

Demand for BV experts in Canada is at an all-time high

The awareness of the business valuation profession in Canada has grown, and demand for experts is at an all-time high, says Dr. Christine Sawchuk, the president and CEO of the CBV Institute, Canada’s valuation professional organization (VPO) and standard-setter. In an interview with Ray Moran (iiBV), she discussed some growing trends, including the increased complexity of valuation work, more demand for transparency and disclosure, emerging valuation metrics (such as for data and ESG), and the increased use of automated valuation models. She also discussed the many doors that the CBV designation opens for young professionals and university students. You can watch the full interview if you click here.

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