Determination of Value – Appraisal Guidance on Developing and Supporting a Credible Opinion

<p>Preface xi</p>
<p>Acknowledgments xiii</p>
<p>Chapter 1: The Problem 1</p>
<p>In Search of a Truth 1</p>
<p>The Assurance Expert 4</p>
<p>Credibility Is Not Synonymous with Truth 7</p>
<p>Where Do We Go from Here? 8</p>
<p>Chapter 2: The Solution 9</p>
<p>Toward a Defi nition of Credibility 9</p>
<p>The Attributes That Make You Credible 10</p>
<p>Operational Credibility Attributes 11</p>
<p>Personal Credibility Attributes 19</p>
<p>General Observations about Credibility 21</p>
<p>Credibility Is Not Synonymous with Truth 23</p>
<p>Don t Confuse Opining with Decision Making 25</p>
<p>Beware of Black Box Opinions 26</p>
<p>Conclusion 26</p>
<p>Chapter 3: The Credibility Pyramid and the Importance of a Well–Defined Analytical Process 29</p>
<p>The Importance of Process 29</p>
<p>The Valuation Process 31</p>
<p>The Credibility Pyramid 34</p>
<p>Three Problem–Solving Phases 36</p>
<p>Conclusion 41</p>
<p>Chapter 4: Pyramids, Not Castles 43</p>
<p>Why Is Credibility Important? 44</p>
<p>Reasonable Assurance 47</p>
<p>Generally Accepted Practices 50</p>
<p>Generally Accepted Practices Lead to Uniformity and Professional Consensus 54</p>
<p>Analytical Gaps 55</p>
<p>Informed Judgment 56</p>
<p>Conclusion 59</p>
<p>Chapter 5: Climbing the Credibility Pyramid 61</p>
<p>The Importance of Revenue Ruling 59 60 61</p>
<p>Identification of Key Pre–Engagement Parameters 63</p>
<p>Planning to Acquire Knowledge about the Subject 65</p>
<p>General Planning Considerations 69</p>
<p>The Importance of the Standard of Value as You Climb the Pyramid 79</p>
<p>Self–Assessment Tools 83</p>
<p>Stepped Reading 87</p>
<p>Conclusion 88</p>
<p>Chapter 6: How to Develop and Report Your Opinion 91</p>
<p>Practice Presenting Your Written Findings Orally 91</p>
<p>Valuation Adjustments 102</p>
<p>Description of a Benchmarking Methodology Used by Valuation Analysts 106</p>
<p>Benchmarking: Relative Weights and Qualitative Analysis 111</p>
<p>Make Sure There Are No Analytical Gaps in the Development and Derivation of Growth Rates 115</p>
<p>Incorporating Prospective Information That Is Presented into Your Opined Results 119</p>
<p>Reporting Your Opined Results 126</p>
<p>Conclusion 129</p>
<p>Chapter 7: Reasonableness Tests 131</p>
<p>Determining Reasonableness 132</p>
<p>Example 1: Derived Estimate of Value 136</p>
<p>Example 2: Guideline Company Method 139</p>
<p>Example 3: Use of Market Multiples 144</p>
<p>Example 4: Federal Tax Compliance 145</p>
<p>Conclusion 146</p>
<p>Chapter 8: Enhancing the Integrity of Your Opinion 149</p>
<p>Understanding the Credibility Threshold 150</p>
<p>Understanding the Scope Undertaken 152</p>
<p>Understanding Analytical Responsibilities and the Impact of Matter/Cause/Effect Analysis 154</p>
<p>Conduct Your Analysis within the Parameters of the Economic Reality Relevant to the Facts and Circumstances 156</p>
<p>Maintain a High Level of Professional Skepticism and Engagement Awareness 157</p>
<p>Review Your Analytical Process for Relevance and Typical Common Errors 160</p>
<p>Be Ready to Respond to Ethical Challenges 162</p>
<p>Enhancing the Integrity of Your Opinion When at Trial or in Hearings 163</p>
<p>Enhancing the Integrity of Your Opinion When at Deposition 166</p>
<p>Conclusion 166</p>
<p>Chapter 9: Reviewing the Work of Others 169</p>
<p>Review Engagement Procedures to Consider 170</p>
<p>Preparing a Document Request for a Review Engagement 172</p>
<p>The Role to Be Assumed: Reviewing Expert or Reviewing Consultant 173</p>
<p>Limiting Conditions and Assumptions 174</p>
<p>Determining an Appropriate Scope for Your Review 175</p>
<p>Minimum Scope Considerations in a Review Engagement 177</p>
<p>Conclusion of a Business Appraisal Review Engagement 177</p>
<p>Business Appraisal Review Opinion 178</p>
<p>Reviewer s Independence 182</p>
<p>Common Errors and Analytical Gaps Found in Valuation Reports 183</p>
<p>Conclusion 188</p>
<p>Chapter 10: The Journey Continues 189</p>
<p>Definition of Credibility 189</p>
<p>Attributes Attached to a Credible Opinion 190</p>
<p>Separating Decision Making from Opining 192</p>
<p>A Note on Generally Accepted Principles and Practices 193</p>
<p>A Definition of the Concept of Informed Judgment 193</p>
<p>Suggestions for Assessing Your Own Methodology the Importance of Reasonableness Tests 194</p>
<p>Suggestions for Enhancing the Integrity of Your Opinion 194</p>
<p>Conclusion 195</p>
<p>Appendix 197</p>
<p>About the Author 209</p>
<p>Index 211</p>