ClarityBV Blog

The American Society of Appraisers has made available (free!) conference materials related to estimating cost of capital, total beta, specific risk, etc. The presentations and papers cover important appraisal issues once you get past the rampant self-aggrandizement.

The AICPA just released “A Guide to Financial Decisions: Implementing an End-of-Life Plan.” The free guide (pdf) was inspired by Hospice of Michigan and the Michigan Association of Certified Public Accountants. It is a timely topic for me, having just been in Michigan for both a funeral and a wedding.

As we all know, life can change quickly and unpredictably. Don’t leave your loved ones a financial mess to untangle! Pages 36 and 37 contain a timeline and checklist of tasks for survivors, including things the bereaved should avoid doing right after a death.

Are you an infovore? (Of course, no sooner was the phrase coined than folks started work on how to market to the infovore!)

Just in case you need more content in your life, here are a few good things we’ve been reading of late…

• Outliers by Malcolm Gladwell (I really liked the 10,000 hour rule section, which coincides nicely with the requirements for the Accredited Senior Appraiser designation from the American Society of Appraisers.)
• The peHUB blog is a great way to stay current from a private equity viewpoint.
• Finally, the In Search of Perfect Client Service blog by attorney Patrick J. Lamb always challenges me with thinking about how to take professional services to a higher level.

And, if you’re more into video… Check out the television show Shark Tank. A bit corny, but fun to watch valuation being done on the fly. It was heartbreaking to watch the entrepreneur that had mortgaged everything. As one of the “sharks” noted, knowing when to quit can be the toughest thing.

Unfortunately, we can’t always be “nice guys” when it comes to valuation work. Much as I dislike requesting what can seem like an excessive amount of information, it pays to avoid tempting shortcuts.

Simple Due Diligence Example

In a recent project, it would have been easy to rely on ownership percentages from tax returns. However, by obtaining and reading the company’s stock ledger, we discovered that the interest to be valued might be a 21% ownership interest, not a 6% ownership interest!

Just that one “little” change may make a $1.8 million difference in value – $2.5 million as compared to $0.7 million. Rhetorical question: Is that material?

Recommended Financial Fiction

On a related note, like Aswath Damodaran, I too enjoy “financial fiction.” I’ve just begun a novel within the genre that I think I can already safely recommend. Stone’s Fall: A Novel by Iain Pears appears to be an intriguing blend of finance, mystery, and old-fashioned storytelling. It also provides a good reminder to wear one’s detective hat when performing business valuations.

Over the weekend, I read a great book entitled, The Seven-Day Weekend: Changing the Way Work Works by Ricardo Semler. “Inc.” magazine reprinted chapter one of the book back in 2004. In addition, MIT has a video of a talk by Semler, “Leading by Omission” from 2005.

One compelling idea was that we resist political authoritarianism, but willingly embrace it in business. If Semco can pull off business democracy, especially through massive economic upheaval, why can’t professional service firms in the U.S.?

The Semco “Survival Manual” is a terrific read on its own. For example, “Employee Timesheet Control – At the Semco Group, each person controls their own working hours. This is a method of transferring responsibility to each person.” (See also VeraSage: Why get rid of timesheets?)

I enjoyed The Seven-Day Weekend so much that I plan to read Semler’s earlier book, Maverick: The Success Story Behind the World’s Most Unusual Workplace.