Ray Rath of Globalview Advisors co-instructed a three-day course offering for the American Society of Appraisers (ASA) at the Chicago Conference Center. Following the course, students challenge a three-hour exam. The Business Valuation (BV) course (ASA BV 302) titled “Special Topics in the Valuation of Intangible Assets” (http://www.appraisers.org/Education/View-Course?CourseID=398), is required for individuals interested in obtaining the ASA’s designation in intangible asset valuation (http://www.appraisers.org/Education/intangible-asset-(ia)-program). The course has been offered by the ASA since June 2010. The ASA’s intangible asset designation is the only designation providing evidence of the technical expertise of individuals performing intangible asset valuations.
Ray originally led the development of this course which includes instruction modules on complex topics impacting intangible asset valuation where there is limited guidance. Course modules include:
Valuation of Contingencies—Theory and valuation of contingent assets and liabilities with a focus on the valuation of contingent consideration included in transaction structures. Overview of accounting guidance and discount rate estimation for liabilities and complex contingencies.
Advanced Technology Valuation—Advanced technology issues including determination of valuation methodologies and assumptions. Analysis of impact of multiple technologies in the development of valuation models.
Valuation of Two Enabling Assets—Detailed discussion of asset and related valuation methodology determination for entities where several assets such as technology, brands or customer relationships “drive” the profitability of the entity. Detailed explanation of the development of “revenue maps,” which help in cash flow estimation for existing and future technologies and customers.
Attrition Measurement—Discussion of alternative metrics for attrition measurement—customer revenues or customer count. Comparison of Constant Attrition Method and Variable Attrition Method for forecast future cash flows from customer related assets. Overview of Weibull distribution and Iowa curves as a means of forecasting customer loss rates.
Differential Value Methods—In-depth discussion and examples on the Greenfield Valuation Method and the With and Without Method.
Covenant Not to Compete Valuations—Theory for the valuation of non-competition agreements. Overview of seminal tax court cases on non-compete valuations including Beaver Bolt v. Commissioner (TCM 1995-549) http://www.ustaxcourt.gov/InOpHistoric/SHAREWELL.TCM.WPD.pdf and Thompson v. Commissioner (TCM 1997-287) http://www.ustaxcourt.gov/InOpHistoric/Thomps0nEstate.TCM.WPD.pdf assessments of factors to consider in valuation. Discussion of personal vs. professional goodwill.
Valuation of Deferred Revenue—Accounting guidance on deferred revenue. Theory and development of assumptions for the valuation of deferred revenue liabilities. Discussion of complexities of deferred revenue and its impact on the valuation of customer relationships in the context of valuations prepared for ASC 805.
Individuals taking the courses included valuation personnel from across the United States. Students included employees of various Big 4 accounting firms and senior personnel from independent valuation firms. Employees of the Internal Revenue Service with a specialization in transfer pricing as well as senior transfer pricing personnel from a Big Four firm were also in attendance.
The American Society of Appraisers (ASA) is the oldest multidisciplinary appraisal nonprofit organization founded in 1936 and established in 1952 in the United States. ASA has become an effective professional affiliation of appraisers of all disciplines, working cooperatively to elevate the standards of the appraisal profession. ASA provides its members the most solid grounding in the appraisal principles that underlie all classes of property: real, personal, tangible and intangible. ASA is a global coverage organization active in Northern America (USA, Canada, Mexico), Europe, China, Japan and Australia.