Valuations

EDS’ Appraisal Review and Management Systems® group value assets across industries and asset classes throughout-the-world. Our multidisciplinary valuers are internationally-recognized and accredited ASA/RICS/MAI & USPAP/IVS appraisal instructors and valuation industry luminaries. We specialize in providing appraisal expert-witness testimony and litigation-support services to attorneys and law firms, and we have prevailed in billions-of-dollars at issue in litigation and Alternative Dispute Resolution.

An Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers.

Royal Institution of Chartered Surveyors, RICS - Equity Development Systems, LTD
Appraisal Institute - Equity Development Systems, LTD.
American Society of Appraisers - Equity Development Systems, LTD.

VALUATION / APPRAISAL SOLUTIONS

An Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers.

Prevailed in billions-of-dollars at issue in some of the world’s most important—high-profile—and valuable valuation-related litigation.

Our appraisal and valuation services are provided by our discipline-specific and multidisciplinary senior appraisers holding international accreditation with the American Society of Appraisers (ASA) and/or The Appraisal Institute (AI) and/or The Royal Institution of Chartered Surveyors (RICS). The ASA is the oldest and largest multidisciplinary appraisal—valuation organization in the world with some 5000 members in 137 countries globally. The Appraisal Institute is a global association of real estate appraisers, with nearly 23,000 valuation professionals in almost 60 countries throughout-the-world. RICS, with headquarters in London, is the leading organization of its kind in the world for more than 100,000 qualified professionals in commercial and residential development, construction and project management, brokerage, planning and finance and valuation. Our experts include Uniform Standards of Professional Appraisal Practice (USPAP) and International Valuation Standards (IVS) and RICS ‘Red Book’ instructors, former State/Federal appraisal regulatory compliance officers, and Value Adjustment Board (VAB) magistrates.

EDS’ Appraisal Review and Management Systems® unit is headed by Executive Managing Director, Steven N. Siegler, ASA, FRICS. Mr. Siegler is an Accredited Senior Appraiser (ASA) with and was honored to serve as the founding International Chairman of Appraisal Review and Management (ARM) for the American Society of Appraisers from 2002-2011. Mr. Siegler co-authored and directed the implementation of the ASA’ Appraisal Review and Management Principals of Valuations series of courses and best practices that are now taught to professional valuers, government officials, legal experts, and many others throughout-the-world.
 
Mr. Siegler holds international valuation accreditation as Fellow, Royal Institution of Chartered Surveyors (FRICS), and he is the only RICS accredited expert witness in the Americas and one of only a handful of such expert witnesses in the world holding the much-coveted RICS Expert Witness Accreditation Service (EWAS) certification.
 
Mr. Siegler holds TS Clearance with the U.S. Government and is uniquely qualified to practice before U.S. Government agencies in national-security-related valuation and in other special matters.

Appraisal Expert Witness Testimony – Litigation Appraisers

An Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers.

We hold the only RICS Expert Witness Accreditation Service (EWAS) Certification in the Americas, one of only a handful of such Appraisal Expert Witness Certifications in the world.

Prevailing as an appraisal expert witness requires highly-trained—highly-skilled—highly-credentialed multidisciplinary review appraisers with decades of experience who master the facts and are able to present clear, objective and compelling findings to judges and juries. We have prevailed in billions-of-dollars at issue in litigation and Alternative Dispute Resolution, and our body-of-work has been cited by U.S. regulators as “The measure by which all review appraisals should be judged”.

EDS pioneered the appraisal review profession and directed the development, writing, and implementation of the appraisal review Principals of Valuation and best practices that are taught to and in use today by professional valuers, legal experts, and government agencies throughout-the-world. 

We provide comprehensive original opinion-of-value appraisal, appraisal review, and rebuttal appraisal expert witness testimony and litigation support services in all asset classes and disciplines of appraisal, tangible and intangible, i.e., Real Property, Business Valuation, Intellectual Property, Personal Property, and Machinery and Technical Services.

Our discipline-specific and multidisciplinary appraisal expert witness testimony and litigation-support providers are internationally accredited ASA/MAI/RICS instructors and well-published luminaries in the global valuation community. They include Uniform Standards of Professional Appraisal Practice (USPAP) and International Valuation Standards (IVS) and RICS ‘Red Book’ instructors, Value Adjustment Board (VAB) Magistrates, and former state/federal appraisal regulatory compliance officers.

We conduct in-depth analyses and provide objective opinions and advice that help resolve complex appraisal and valuation issues. We advise client counsel in the preparation of appraisal related discovery, opposing appraiser expert challenges, and appraisal/appraiser compliance with state and federal regulations, USPAP, IVS, ‘Red Book’, and international Basel Accords.

We specialize in handling complex multidisciplinary and multi-jurisdictional appraisal matters. As an example; a dispute wherein multiple international locations/jurisdictions and multiple disciplines of valuation are at issue e.g., Real Property, Business Valuation (Business Income), and Machinery and Equipment. Unlike others, EDS will assign one of its internationally accredited valuation experts from each discipline of valuation at issue and possessing the requisite jurisdictional and geographic competency to contribute to the process. This ensures credible findings that will withstand challenges and scrutiny from regulatory, judicial and taxing authorities.

Our Appraisal Review and Management Systems® unit is headed by Executive Managing Director, Steven N. Siegler, ASA, FRICS. Mr. Siegler is an Accredited Senior Appraiser (ASA) with and was honored to serve as the founding International Chairman of Appraisal Review and Management (ARM) for the American Society of Appraisers from 2002-2011. Mr. Siegler co-authored and directed the implementation of the ASA’ Appraisal Review and Management Principals of Valuations series of courses, ARM 201, 202, 203 and 204 and best practices that are now taught to professional valuers, government officials, legal experts, and many others throughout-the-world.

Mr. Siegler holds international valuation accreditation as Fellow, Royal Institution of Chartered Surveyors (FRICS), and he is the only RICS accredited expert witness in the Americas and one of only a handful of such expert witnesses in the world holding the much-coveted RICS Expert Witness Accreditation Service (EWAS) certification.
Mr. Siegler holds TS Clearance with the U.S. Government and is uniquely qualified to practice before U.S. Government agencies in national-security-related valuation and in other special matters.

Steven is an Elite-Rated member of the peer-voted SuperAppraisers® Global Network of internationally-recognized appraisers. He has served as an appraisal expert witness in U.S. Courts, international tribunals, and Alternative Dispute Resolution, and he has prevailed in billions-of-dollars at issue in some of the world’s most important—high-profile—and valuable valuation cases.

Engaging the correct expert witness appraiser is critical. EDS’ unparalleled level of expertise is recognized and appreciated in courtrooms and tribunals throughout-the-world.

APPRAISAL MEDIATION – ARBITRATION – UMPIRE – REFEREE

Counselors at Appraisal® / Counselors at Valuation®

EDS is an Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers.

Appraisal alternative dispute resolution requires highly-trained—highly-skilled—highly-credentialed—unimpeachable appraisal specialists with decades of experience that are specifically trained and accredited to serve as independent—third-party—neutrals to adjudicate appraisal disputes.

We pioneered the review appraisal profession and directed the development, writing, and implementation of the review appraisal Principals of Valuation and best practices that are taught to and in use today by professional valuers, legal experts, and government agencies throughout-the-world. Our experts have handled billions-of-dollars at issue and our review appraisals have been cited by U.S. regulators as “The measure by which all review appraisals should be judged.”

Our discipline-specific and multidisciplinary experts are uniquely qualified—internationally accredited—American Society of Appraisers (ASA), Royal Institution of Chartered Surveyors (RICS), Appraisal Institute (MAI), well-published luminaries in the global valuation communities. They include Uniform Standards of Professional Appraisal Practice (USPAP) and International Valuation Standards (IVS) instructors, and Value Adjustment Board (VAB) Magistrates and former state / federal appraisal regulatory compliance officers. We hold the only RICS Expert Witness Accreditation Service (EWAS) certification in the Americas and one of only a handful of such certifications in the world.

We provide comprehensive appraisal alternative dispute resolution services in all disciplines of valuation and asset classes, tangible and intangible, i.e., Real Property, Business Valuation, Intellectual Property, Personal Property, and Machinery and Technical Services.

We specialize in handling complex multidisciplinary and multi-jurisdictional appraisal dispute resolution matters. As an example; a dispute wherein multiple international locations/jurisdictions and multiple disciplines of valuation are at issue e.g., Real Property, Business Valuation (Business Income), and Machinery and Equipment. Unlike others, EDS will assign one of its internationally accredited valuation experts from each discipline of valuation at issue and possessing the requisite jurisdictional and geographic competency to contribute to the process. This ensures This ensures independent—credible findings that will withstand challenges and scrutiny from regulatory, judicial and taxing authorities.

EDS’ Appraisal Review and Management Systems® unit is headed by Executive Managing Director, Steven N. Siegler, ASA, FRICS. Mr. Siegler is an Accredited Senior Appraiser (ASA) with and was honored to serve as the founding International Chairman of Appraisal Review and Management (ARM) for the American Society of Appraisers from 2002-2011. Mr. Siegler co-authored and directed the implementation of the ASA’ Appraisal Review and Management Principals of Valuations series of courses, ARM 201, 202, 203 and 204 and best practices that are now taught to professional valuers, government officials, legal experts, and many others throughout-the-world.

Additionally, Mr. Siegler holds international valuation accreditation as Member of the College of Fellows, Royal Institution of Chartered Surveyors (FRICS), and he is the only RICS accredited expert witness in the Americas and one of only a handful of such expert witnesses in the world holding the much-coveted RICS Expert Witness Accreditation Service (EWAS) certification.

Mr. Siegler holds TS Clearance with the U.S. Government and he is uniquely qualified to practice before U.S. Government agencies in national-security-related valuation and in other special matters.

Steven is an Elite-Rated member of the peer-voted SuperAppraisers® Global Network of internationally-recognized appraisers. He has served as an appraisal expert witness in U.S. Courts, international tribunals, and Alternative Dispute Resolution, and he has prevailed in billions-of-dollars at issue in some of the world’s most important—high-profile—and valuable valuation cases.

Our appraisal dispute resolution services are a cost-effective, out-of-court, alternative dispute resolution format that helps parties resolve complex and contentious valuation matters in a fair, balanced, and unbiased way.

VALUATION ADVISORY

TRANSACTIONAL OPINIONS: VALUATION FAIRNESS OPINIONS – APPRAISAL RIGHTS – APPRAISAL ARBITRAGE – CONTRIBUTION-IN-KIND REPORTS

An Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized review and litigation appraisers.

Valuation Fairness Opinions, Appraisal Rights, Appraisal Arbitrage, Contribution-in-Kind Reports, and other transactional opinions document, evidence and support that a proposed transaction is either financially sound and commercially reasonable or it is not.

Objective, credible, authoritative and well-supported opinions are essential to show that a Board of Directors and other fiduciaries have or have not acted prudently and have met their regulatory requirements and other obligations to operate in the best interests of the shareholders and other stakeholders as to whether or not to proceed with a particular transaction.

As with all valuation opinions, they are only as credible as the valuation experts selected to prepare and support them against challenges. EDS valuation experts are internationally accredited  American Society of Appraisers (ASA), Royal Institution of Chartered Surveyors (RICS), and Appraisal Institute (MAI) instructors who are well-published luminaries in the global valuation community. They include Uniform Standards of Professional Appraisal Practice (USPAP) and International Valuation Standards (IVS) and RICS ‘Red Book’ instructors, Value Adjustment Board (VAB) Magistrates, and former state/federal appraisal regulatory compliance officers whose independent professional opinions have allowed our clients’ to prevail in billions-of-dollars at issue in courts and tribunals and alternative dispute resolution throughout-the-world.

Typical transactions involving Valuation Fairness Opinions, Appraisal Rights, Appraisal Arbitrage, and Contribution-in-Kind Reports include: Mergers and Acquisitions, Appraisal Rights / Dissenting Stockholder / Appraisal Arbitrage, Leveraged Buyouts, Managed Buyouts, ESOP-Related Transactions, Corporate Reorganizations, Corporate Divestitures, Bond Indentures, Joint Ventures, Financial Restructuring, Affiliated Transactions, Going-Private Transactions, and major leasehold and capital asset expenditures.

Our valuation opinion process includes: comprehensive due diligence, valuation of the company, including specific valuation of equity classes or debt securities, valuation of the consideration if other than cash, assessment of the fairness of the proposed transaction price, from a financial point of view, by comparing the indicated range of fair value to the analysis of the transaction strike price, the process undertaken by the Board of Directors, the structure of the transaction, the likelihood of transaction closing (e.g., public relations, political, regulatory, financing and other considerations), thorough analysis and assessment of the offer and the opportunity to improve terms, and the form and likelihood of realizing the consideration.

EDS Valuation Fairness Opinions, Appraisal Rights, Appraisal Arbitrage, and Contribution-in-Kind Reports and other such transactional opinions are independent and objective and render credible findings that will withstand challenges and scrutiny from regulatory, judicial and taxing authorities.

Our Valuation Advisory unit is headed by Executive Managing Director, Steven N. Siegler, ASA, FRICS. Mr. Siegler is an Accredited Senior Appraiser (ASA) with and was honored to serve as the founding International Chairman of Appraisal Review and Management (ARM) for the American Society of Appraisers from 2002-2011. Mr. Siegler co-authored and directed the implementation of the ASA’ Appraisal Review and Management Principals of Valuations series of courses, ARM 201, 202, 203 and 204 and best practices that are now taught to professional valuers, government officials, legal experts, and many others throughout-the-world.

Additionally, Mr. Siegler holds international valuation accreditation as Member of the College of Fellows, Royal Institution of Chartered Surveyors (FRICS), and he is the only RICS accredited expert witness in the Americas and one of only a handful of such expert witnesses in the world holding the much-coveted RICS Expert Witness Accreditation Service (EWAS) certification.

Mr. Siegler holds TS Clearance with the U.S. Government and he is uniquely qualified to practice before U.S. Government agencies in national-security-related valuation and in other special matters.

Steven is an Elite-Rated member of the peer-voted SuperAppraisers® Global Network of internationally-recognized appraisers. He has served as an appraisal expert witness in U.S. Courts, international tribunals, and Alternative Dispute Resolution, and he has prevailed in billions-of-dollars at issue in some of the world’s most important—high-profile—and valuable valuation cases. 

APPRAISAL REVIEW

EDS is an Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized review appraisers.

An appraisal review is an appraisal of an appraisal.

An appraisal review is an appraisal of an appraisal. It tests the credibility of the appraisal. Appraisal reviews require highly-trained—highly-skilled—highly-credentialed review appraisers with decades of experience that are specifically trained and accredited in providing appraisal reviews and in developing and reporting differing opinions-of-value, rebuttal appraisals, and appraisal expert witness testimony.

EDS pioneered the appraisal review profession and directed the development, writing, and implementation of the review appraisal Principals of Valuation and best practices that are taught to and in use today by professional valuers, legal experts, and government agencies throughout-the-world. Our review appraisal services have allowed our clients’ to prevail in billions-of-dollars at issue, and our review appraisals have been cited by U.S. regulators as “The measure by which all review appraisals should be judged.”

Our discipline-specific and multidisciplinary review appraisers are internationally accredited ASA/MAI/RICS instructors and well-published luminaries in the global valuation community. They include Uniform Standards of Professional Appraisal Practice (USPAP) and International Valuation Standards (IVS) and RICS ‘Red Book’ instructors, Value Adjustment Board (VAB) Magistrates, and former state/federal appraisal regulatory compliance officers.

We provide appraisal reviews in all disciplines of appraisal and asset classes, tangible and intangible, i.e., Real Property, Business Valuation, Intellectual Property, Personal Property, and Machinery and Technical Services to clients throughout-the-world. EDS specializes in providing appraisal expert witness testimony and litigation support services to attorneys and law firms and, in providing appraisal related Alternative Dispute Resolution (ADR) services as Arbitrators, Mediators, Umpires, and Referees.

Our appraisal reviews analyze, evaluate and report matters pertinent to the subject appraisal’s: (1) Completeness of the material under review, (2) Adequacy and relevance of the data, including the propriety of adjustments (if any) to the data, (3) Appropriateness of the appraisal methods and techniques used, (4) Whether the analyses, opinions, and conclusions are appropriate and reasonable, i.e., credible, (5) conformity with applicable appraisal development and reporting standards required of the Uniform Standards of Professional Appraisal Practice (USPAP) / International Valuations Standards (IVS) / RICS Red Book, and Basel Accords, (6) the professional qualifications and licensing requirements of the reporting appraiser(s), (7) compliance with applicable state and U.S. Regulatory 75 FR 77450 Interagency Appraisal and Evaluation Guidelines, (8) compliance with any and all other applicable standards, guidelines, rules and regulations that apply as of the Effective Date of the subject appraisal under review.

EDS appraisal reviews are independent and objective and render credible findings that will withstand challenges and scrutiny from peer reviews, regulatory, judicial and taxing authorities.

The Intended Use and Scope-of-Work of the appraisal review determine the level of complexity and the cost of the report.

REAL PROPERTY (HIGH-VALUE RESIDENTIAL / COMMERCIAL) / INDUSTRIAL:
Real property is defined as all the interests, benefits, rights and encumbrances inherent in the ownership of physical real estate. There are several specialties in real property: urban, residential, rural, timber and ad valorem (property tax). Real property appraisal reviews include services for use in real estate acquisition and disposition, lending, insurance, estate taxes, property taxes, and eminent domain (condemnation), conservation easements, and leasehold interests.

BUSINESS VALUATION / ESOP’ / ENTERPRISE VALUE / BUSINESS INTERRUPTION / ECONOMIC DAMAGES / APPRAISAL-RIGHTS (ARBITRAGE) / ASSET-BACKED SECURITIES:
EDS’ internationally accredited ASA/RICS Business Valuation experts review appraisals of the value of businesses, business ownership interests, ESOP’s, and securities for businesses of all sizes. We also review the value of specific intangible business assets such as patents, trademarks, employment agreements, copyrights, and goodwill.

INTELLECTUAL PROPERTY:
Intellectual property is any product of the human intellect that the law protects from unauthorized use by others. Intellectual property is traditionally comprised of four categories: patents, copyrights, trademarks, and trade secrets.

MACHINERY AND EQUIPMENT AND TECHNICAL SERVICES:
EDS’ internationally accredited Machinery and Technical Services experts perform appraisal reviews of market or liquidation value appraisals for various purposes such as sale, acquisition, ad valorem tax, eminent domain, conservation easement, collateralization, and insurance or residual forecasting.

PERSONAL PROPERTY:
EDS’ internationally accredited Personal Property experts provide appraisal reviews of tangible, movable property that is utilitarian, collectible, decorative or a combination of the three for specific purposes such as insurance, estate tax, damage claims, donation, sale, dissolution of marriage and equitable distribution.

MULTIDISCIPLINARY REVIEW APPRAISALS:
A comprehensive review of an appraisal involving two or more components of Real Property, Business Valuation, Intellectual Property, Machinery and Equipment and Technical Services, and Personal Property.

APPRAISAL PORTFOLIO MANAGEMENT / AUDITS / REGULATORY COMPLIANCE

EDS is an Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized review appraisers.

Our Appraisal Management Systems® group designs, implements, manages, audits and curates the day-to-day appraisal management and regulatory compliance requirements of comprehensive multidisciplinary appraisal portfolios for private-equity firms, investors, managed funds, federally-regulated financial institutions, secured creditors, asset-based lenders, leasing companies, insurance companies, family offices, endowments, foundations, high-net-worth individuals, multinational corporations, and myriad others throughout-the-world.

Federally regulated financial institutions and myriad other fiduciaries are required to maintain current and accurate appraisals/valuations of all collateral assets at all times throughout the lending/investment lifecycle. Dodd-Frank, Basel III, and many other newly enacted laws, rules, and regulations have placed enormous challenges upon regulated commercial banks and lenders to comply with these stringent new laws. Even small locally-owned community banks are not exempt from and must now comply with Basel Accords and international rules and regulations. It has become overwhelming.
Similarly, private-equity firms, hedge funds, public and private institutional investors, and myriad other fiduciaries alike must also maintain such vital valuation information to ensure the integrity of their investment portfolios. Investors, especially activist investors, demand such accountability to ensure the credibility of reported values and that their precious investment dollars are being properly administered and managed.

While their specific needs and regulatory requirements may vary, prudent lenders and investors throughout the world rely upon EDS to provide comprehensive—objective—independent—appraisal portfolio management services.
Our Appraisal Portfolio Management Group programs and services are provided by our multidisciplinary senior appraisers holding international accreditation with the American Society of Appraisers (ASA) and/or The Appraisal Institute (AI) and/or The Royal Institution of Chartered Surveyors (RICS). The ASA is the oldest and largest multidisciplinary appraisal—valuation organization with some 5000 members in 136 countries throughout the world. The Appraisal Institute is a global association of real estate appraisers, with nearly 23,000 valuation professionals in almost 60 countries throughout the world. RICS, with headquarters in London, is the leading organization of its kind in the world for more than 100,000 qualified professionals in commercial and residential development, construction and project management, brokerage, planning and finance, and valuation. Our experts include USPAP/IVS/Red Book instructors and former State/Federal appraisal regulatory compliance officers.

EDS’ Appraisal Portfolio Management Group programs and services:
• Reduce and manage risk
• Enhance client relationships
• Afford greater confidence and flexibility to increase business
• Assure compliance with: U.S. Regulatory 75 FR 77450 Interagency Appraisal and Evaluation Guidelines, the Uniform Standards of Professional Appraisal Practice (USPAP) and/or International Valuation Standards (IVS) / RICS Red Book / Basel Accords requirements and other such controlling standards and guidelines.

REAL ESTATE APPRAISALS: COMMERCIAL / INDUSTRIAL / HIGH-VALUE RESIDENTIAL

An Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers.

An accurate understanding of the real-world value of real estate is critical to owners, operators, lenders, investors, attorneys, and myriad other stakeholders. It is central to secure and maintain financing, for reporting purposes, or to shape strategic changes.

We have provided real estate appraisals and real estate appraisal reviews of billions-of-dollars in commercial/industrial/high-value residential real estate, and we have prevailed as experts in billions-of-dollars of real estate at issue in some of the world’s most important—high-profile—and valuable real estate matters in litigation.

EDS is an Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers. Our real estate appraisers include internationally accredited ASA/MAI/RICS and USPAP/IVS Appraisal Instructors, Reviewers, Valuation Adjustment Board Magistrates, Former Regulators, and all are well-published luminaries in the global valuation community. Managing Director, Steven N. Siegler, ASA, FRICS is the only RICS accredited expert witness in the Americas and one of only a handful of such expert witnesses in the world holding the much-coveted RICS Expert Witness Accreditation Service (EWAS) certification.

When, as part of Dodd-Frank, the Federal Deposit Insurance Corporation (FDIC) acting for and on behalf of the U.S. Federal Reserve and all inter-agency regulators sought the expertise to develop, implement and monitor the new National Appraisal Ordering and Appraisal Review Protocols for the United States and all US territories, it came to EDS.

We would welcome the opportunity to bring this level of real estate appraisal expertise to you.

BUSINESS VALUATION

EDS is an Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers.

EDS business valuation experts provide strategic guidance for businesses at their most critical junctures, such as financing, financial reporting, tax management, business planning, ownership transition, and litigation. 

EDS Business Valuation experts are ASA/RICS and USPAP/IVS appraisal instructors, reviewers, and well-published luminaries in the global valuation community. We have provided billions-of-dollars of Business Valuation’s and Reviews, and prevailed as Business Valuation expert witnesses in billions-of-dollars at issue in some of the world’s most important—high-profile—and valuable Business Valuation matters in litigation and ADR.

Our Business Valuation experts understand, develop and report critical multi-disciplinary component value drivers and provide the insight, research, and professional opinion of values that are independent and objective and render credible findings that will withstand challenges and scrutiny from regulatory, judicial and taxing authorities.

EDS is an Elite-Rated member of the peer-voted Super Appraisers® Global Network of internationally-recognized appraisers. Our Business Valuation appraisers are ASA/RICS and USPAP/IVS appraisal instructors, reviewers, and well-published luminaries in the global valuation community.

We have provided billions-of-dollars of Business Valuation’ and reviews, and we have prevailed as experts in billions-of-dollars at issue in some of the world’s most important—high-profile—and valuable Business Valuation matters in litigation.

Overview of Valuation Methodology

Correctly valuing a business is central to any successful M&A transaction. As much art as science, valuation strives to quantify the financial benefits of owning the business today and in the future. Here are the core principles of valuation, components of business value, and most common methods used to assess it.

Core Principles

Which will yield greater contribution to equity holders: liquidating the business’s assets, or operating it as a going concern? The answer lies in comparing (a) the value of the business based on thecash flowsit is expected to generate discounted to reflect the associated risk, and (b) the estimated net proceeds that could be realized by selling the underlyingassetsand settling all liabilities.

This foundational question gives rise to the two most common valuation approaches: income or cash flow-based, and asset-based. If a business is viable on a stand-alone basis, valuing it as a going concern based on its cash flows will generally be more appropriate and yield a higher value.

With this as a starting point, we look at some of the core principles of valuation which apply across private and open-market transactions, reflecting economic theory, common practice, and legal precedent[1]:

  • Value is specific to a point in time, reflecting available information and reasonable expectations at that time.
  • Capital Structure – Value should be independent of how a business is financed, so enterprise value is calculated assuming a “normalized” capital structure, before debt servicing costs.
  • Cash Flow – For an economically viable business, value is mainly a function of future discretionary cash flows.
  • Rate of Return – Market forces – including economic conditions, borrowing rates, the market’s view of an industry’s growth prospects, competitive landscape and risks, and company-specific risk factors – determine the required rate of return built into valuation models.
  • The more liquid a business or equity interest (i.e., the number of prospective buyers at the relevant point in time), the higher the value.
  • Higher Net Tangible Operating Assets will tend to support a higher valuation, even when using cash flow-based techniques, as they imply barriers to entry, greater access to debt financing, inherent liquidation value, and lower risk than intangible assets (i.e., goodwill).
  • Commercial and Non-Commercial – Commercial (i.e., transferrable) and non-commercial (i.e., specific to an owner) value are distinct concepts, with the latter accounting for differences in what prospective buyers may be willing to pay for a business.
  • Controlling vs. Minority Interest – The controlling interest in a privately held business may have a higher value per share than a minority interest in the same company; this is not typically the case in publicly traded companies, whose minority shareholders have access to a liquid market.

Components of Business Value

The enterprise value of a business is its total value, including both its interest-bearing debt and equity components. It is the total value of:

  • Interest-bearing debt and equivalent liabilities
  • The value of all outstanding shares, or the owners’ equity, often referred to as the “intrinsic value” of the business. This, in turn, is comprised of:
    • Adjusted net book value, i.e., tangible operating assets less liabilities
    • Intangible value, including identifiable intangible assets (e.g., brand names, patents, copyrights, etc.) and non-identifiable intangible assets, or goodwill
  • Any incremental value above the intrinsic value, as perceived by a buyer, resulting from expected synergies or other economic benefits that are not available to the business on a standalone basis. Intrinsic value plus expected synergies is known as “strategic value”.

Valuation Methods

Cash Flow-Based

Because of their ability to reflect the future economic benefits of an ongoing business, cash flow methodologies are most commonly used in business valuation. There are various ways to estimate value based on cash flow – each with its unique benefits and limitations – including applying a multiple to an income number like EBITDA, capitalizing cash flows, and discounting cash flows. All of these methodologies require:

  • An estimate of prospective future cash flows, with discretionary cash flow considered to be the most accurate measure
  • Determination of the risk involved in achieving those cash flows, which is then expressed as a rate of return (discount rate or capitalization rate), or valuation multiple
  • The deduction of interest-bearing debt and equivalent liabilities from the enterprise value, which normalizes the capital structure and yields the equity value of the business
  • An assessment of the business’s underlying net assets, and adjustments to reflect excess or deficient net operating assets, as well as redundant assets (e.g., owned building or plane)

Figure 1 summarizes the cash-flow based approach to valuation.

The art and judgment in this type of valuation lie mainly in determining prospective cash flows and the appropriate level of risk to apply. Note that the same enterprise value can be calculated using a conservative cash flow number and lower risk level or a more ambitious cash flow and a higher level of risk.

Asset-Based

We use asset-based valuation methodologies when a business is not viable as a going concern, where it is more practical for an owner to dissolve rather than sell a small company, or for capital-intensive businesses where the net asset value may exceed the present value of cash flows. The most common asset-based methodology calculates the liquidation value, though in some cases adjusted net book value or real estate valuation are used.

Liquidation can be either forced (e.g., when a failing company goes into receivership) or voluntary, and take place either immediately or over an extended period of time. Voluntary liquidation typically involves circumstances more favorable to the owner, and yields a higher valuation. When liquidation takes place in a relatively short period of time, it is considered less risky and avoids prolonged overhead expenses, often resulting in a higher valuation than a more extended process.

Under the liquidation value methodology:

  • Assets on the balance sheet are restated to reflect their current net realizable values (sale price less disposition costs)
  • Liabilities are deducted from the expected proceeds resulting from the sale of the assets, normally at face value
  • Liquidation costs are deducted to calculate the net proceeds before income taxes
  • Corporate income taxes are deducted, resulting in the “proceeds available for distribution”, or liquidation value of the business

Industry or Business Model-Specific Asset Based

Occasionally a buyer will focus entirely on the acquisition of an industry or business model-specific asset, like nursing home beds or hot water tanks or subscriptions for a service or product. In particular, “The subscription business model is booming. Previously dominated by the likes of newspapers, magazines, gyms, utilities, and telecommunications firms, … business-to-consumer subscription businesses have attracted more than 11 million U.S. subscribers in 2017, and the industry as a whole has been growing at 200% annually since 2011.”[2]

In a sense, these are both cash flow and asset-based valuations. Typically, we build revenue and profitability per asset unit, costs of acquisition, rates of turnover, etc. into our cash flow and risk assumptions. We also look at the multiples applied to the specific asset in comparable transactions.

[1] Principles from H.E. Johnson, Business Valuation, 2012.

[2] D. McCarthy and P. Fader, “Subscription Businesses Are Booming. Here’s How to Value Them”, hbr.org, December 19, 2017.

VALUATIONS — MOVEABLE  PROPERTY APPRAISALS / MACHINERY & EQUIPMENT (MTS)

EDS clients enjoy and benefit from our proprietary real-time global database of moveable property transactions. Our appraisers work onsite to create detailed equipment lists, and pair this knowledge with in-depth market analysis driven by our proprietary network of industry contacts, the depth of experience from the largest ASA/RICS accredited MTS team in the industry, as well as the direct recovery experience of our commercial/industrial disposition experts, who have handled the disposition of billions-of-dollars of commercial/industrial assets.

CASE STUDIES

Steven N. Siegler, ASA, FRICS, an internationally recognized appraisal expert witness, successfully represented Stephen M. Case,

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Steven N. Siegler, ASA, FRICS, an internationally recognized appraisal expert witness, successfully represented at arbitration

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Steven N. Siegler, ASA, FRICS Managing Director, Equity Development Systems, Ltd., successfully represented Tower Acquisition,

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The Federal Deposit Insurance Corporation (FDIC) acting for and on behalf of the Federal Reserve

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Steven N. Siegler, ASA, FRICS, an internationally recognized appraisal expert witness has been awarded the

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Steven N. Siegler, ASA, FRICS, successfully represented international financier Gianfranco Gobbi with appraisal expert witness

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JGB Bank has named Equity Development Systems, Ltd., to provide regulatory lending compliance appraisal and

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Pratt, Wang and Sarkissian Receive Prestigious Honorary Appraisal Review and Management (ARM) Designation from Steven

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