The ASA/USC 13th Annual Fair Value Conference was held at the offices of KPMG LLP in downtown Los Angeles on May 10, 2018. Ray Rath of Globalview recognized the need for a fair value focused conference to enhance the sharing of fair value measurement insights. Ray has organized or co-organized the conference for each of its 13 years since its inception.

This year’s conference sold out with in-person attendance of over 120, including individuals from across the U.S. and internationally. The conference was also available by webcast and a large audience attended by webcast as well.

Conference presentations included:

Cost of Capital UpdateRoger Grabowski, Managing Director at Duff & Phelps LLP. Roger discussed the status of “QExit” and its impact on the risk-free rate and how the 2017 Tax Cuts and Jobs Act impacts the cost of equity and the WACC. Roger also discussed issues in estimating the ERP and size premia.

Fair Value Auditors PanelTony Alfonso, Partner at BDO; Austin Lee, Managing Director at Deloitte, Valuation and Business Analytics; Leigh Miller, Partner at Ernst & Young, Transaction Advisory Services; John Ferro, Partner at Grant Thornton; Kevin Voigt, Partner at KPMG, Economic and Valuation Services Group; James Marshall, Principal at PricewaterhouseCoopers, Transaction Services; and Tony Aaron, USC Leventhal School of Accounting, Moderator. Senior valuation personnel (four of whom are either global or national valuation practice leaders) from the six largest accounting firms discussed the implications and current status of the Mandatory Performance Framework (MPF) and Certified in Entity and Intangible Valuations (CEIV®) designation. The MPF provides minimum performance requirements for certain fair value estimates. The CEIV designation provides users of fair value estimates with increased comfort regarding the technical qualifications of individuals to perform these projects.

Tax Cuts and Jobs Act of 2017 (“TCJA”) Valuation ImpactWill Frazier, Managing Director at Stout; and Milind Shah, Principal at KPMG, Washington National Tax Services. The TCJA has material impacts on all aspects of valuations. Will Frazier, head of the ASA’s task force developing guidance on the TCJA, and Milind Shah discussed key elements of the TCJA and their implications for appraisers.

Contingent Consideration Task Force UpdateAlok Mahajan, Partner at KPMG; and Ron Elkounovitch, Senior Manager at Ernst & Young. The Appraisal Foundation Task Force developing valuation guidance for contingent consideration released its first exposure draft in February 2017. The speakers provided an update on the exposure draft. They also discussed important technical elements of contingencies valuations.

Rethinking Control PremiaAmanda Miller, Executive Director at Ernst & Young, Complex Securities Valuation Group. The Appraisal Foundation and the AICPA recently issued guidance that challenges the use of control premiums encouraging professionals instead to think about the fundamental drivers of value. Amanda’s presentation discussed control premium theory and best practices associated with the development and use of control premiums.

PCAOB UpdateGeorge Wilfert, Deputy Director at Public Company Accounting Oversight Board; and Thomas Ryan, Professor of the Practice, USC Leventhal School of Accounting. The PCAOB released draft standards with important implications to auditors and appraisers that perform valuations for financial reporting including: 1) Auditor’s Use of the Work of Specialists, and 2) Auditing Accounting Estimates, including Fair Value Measurements. An overview of the draft standards and other developments at the PCAOB impacting fair value determinations was provided.

Pepperdine Capital Markets Survey UpdateCraig R. Everett, Assistant Professor of Finance, Director, Private Capital Markets Project Graziadio School of Business and Management, Pepperdine University. The development of discount rates for business valuations continues to be an area of concern. Craig provided an update on the Private Capital Markets Project survey findings.

ASA UpdateJeffrey Tarbell, Chair, Business Valuation Committee, Director at Houlihan Lokey. Jeff provided an update on developments at the ASA.

Volatility MeasurementVincent Covrig, PhD, CFA,, Managing Director at Crowe Horvath, LLP. Vincent presented on Volatilities of Commonly-Used Financial Metrics: Important Data For Earnout Valuations. The presentation covered research being performed by Dr. Covrig and Dan McConaughy, PhD, ASA, Valuation Services Managing Director at Crowe Horwath, LLP.

AICPA Fair Value UpdateYelena Mishkevich, Senior Manager, AICPA. Yelena provided an update on AICPA efforts pertaining to fair value measurements including the status of a guide on portfolio investment valuations for private equity and venture capital funds, the status of a Business Combinations guide, and the status of a new valuation credential Certified in the Valuation of Financial Instruments® (CVFI®).

We are pleased to answer any questions pertaining to any/all of these presentations. Please contact Ray Rath at or call (949) 475-2808 with any questions.

The 14th Annual Fair Value conference is planned for June 2019.