Valuation expert Christopher Mercer talks about five big valuation issues at the AICPA/AAML National Conference on Divorce in Las Vegas.
Christopher Mercer on His Presentation:
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About Christopher Mercer:
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Christopher Mercer is an author, speaker, and an experienced valuator. He has prepared, overseen or contributed to more than 1,000 valuations for the purposes related to merger and acquisition, litigation, and tax, among others. He serves on the professional board of the International Valuation Standards Council and is also the immediate past chairman of the Standards sub-committee for the American Society of Appraisers. Chris is also a contributing editor to An Estate Planners Guide to Revenue Ruling.
Chris is offering his newsletter, written for estate planners which is often an issue in divorce, to those who attend the upcoming Conference. He has also offered to send notifications of his blog entries to attending lawyers. Additionally, he offers a discount on his book, “Buy/Sell Agreements for Closely Held and Family Business Owners,” as well as excerpts from “A Reviewer’s Handbook to Valuation.” Chris is doing CLE presentations for attending lawyers. Preapproved lawyers will get the CLE credits, but any lawyer can benefit from the information.
Could you speak about your experience as a valuation expert in the divorce arena?
I started in the valuation business in the late ’70s and by the early ’80s I was in business at Mercer Capital. I got my initial litigation experience in local or area divorce courts and testified a number of times in divorce matters around Memphis, Tennessee. Over a period of years, I migrated away from the divorce arena, and didn’t testify very much. I was busy doing other things.
In recent years, I’ve been engaged in a number of divorces around the country. Ranging from California to New York to Florida and places in between, when there’s a substantial business involved and someone is looking for a national resume, my experience is used in those kinds of cases.
Do you get hired because attorneys are looking for somebody with national experience or diversified background?
One of the reasons some attorneys like calling me is that I don’t do litigation all of the time. Probably half of my business is involved in litigation and I do a lot of other things. Consequently, it’s very hard for an opposing counsel to label me as a hired gun or someone who just does this every day for a living. I have a certain amount of independence that someone who is involved in the divorce arena every day has a hard time exhibiting.
Can you share insights into the value of a family lawyer attending this event?
I think one of the big advantages of attending this joint event is the opportunity to meet, not only with some of the best divorce attorneys in the country, but a variety of experts, from valuation to forensic. I don’t know of another conference where you have such an opportunity to meet a variety of people that you might want to do business with down the road.
Information is valuable, but so are connections. I’m assuming the connections made at the conference can be invaluable?
I’ve never been hired by information. I’m always hired by someone who either knows me or knows about me through someone. That’s the way it is with all of us service providers.
Can you tell us about what you’ll talk about at the conference?
I’ve been asked to talk about five big valuation issues. The issues that I’ll be talking about in that session are basically:
- The components of build-up discount rates.
- The use of control premiums and minority interest discounts in valuation.
- Normalizing adjustments to the income statement for excess owner compensation.
- The guideline public company method and the guideline transactions method.
- Fundamental adjustments that we have to make to public multiples to apply to private companies based on differences in expected risk and expected growth.
I’ll also be talking on a panel about marketability discounts.
It sounds like information that was timely two years ago, may be out of date now. Is that the case?
In the discount rate area, yes. Some of these issues are what I would refer to as timeless issues. They remain issues going forward just as they were issues over the past 20 years. The names of the players change but the issues remain the same. It’s always excellent to try to be on top of what is going on currently.
Does it make a difference for the family lawyer to have a deeper understanding of these issues?
Well, in my experience, if a family lawyer has some understanding of valuation principles, he or she is going to have a real competitive advantage over a lawyer who does not.
The Full Interview with Christopher Mercer:
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The 2014 National Divorce Conference will be held April 23-25, 2014 at the Bellagio Hotel in Las Vegas, Nevada. Discounts for Early Bird, AAML members, AICPA members and members of the Divorce Marketing Group’s LinkedIn group “Marketing for Divorce Professionals” are now available. Click here to register.
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