Executive's Guide to Fair Value: Profiting from the New Valuation Rules

FASB is Pushing Fair Value.

Financial Instruments and the Legacy of Enron.

Theoretical Merits of Fair Value Accounting.

Fair Value is the New Paradigm.

How Reliable are Fair Values?

Relevance of Fair Value.

How Exact Can the Determination of Fair Value Be?

Deal Expenses.

Managing Earnings: The Potential for Manipulation.

Chapter 2. Valuation of a Business: What Is It Really Worth?

Fundamental Basis of All Values.

Comparable Assets Can Determine Fair Value.

Discounted Cash Flow- The Income Approach.

Developing Supportable Cash Flow Projections.

Earnings Before Interest Taxes Depreciation and Amortization (EBITDA).

Myth of Comparable Companies-Making Adjustments.

Definition of a Business.

Valuing a Start-Up (Early-Stage) Business.

Misuse of Valuation Reports.

Business Enterprise Valuations (BEV).

Chapter 3. Litigation and the "True" Determination of Value.

Valuation for Divorce Proceedings.

Appraisal Reports that are "Made as Instructed".

Audience for Appraisal Reports.

Buy and Sell Agreements.

Don't Use a Formula.

Periodic Valuations of Partnerships, Joint Ventures, and Closely-Held Companies.

Chapter 4. Accounting for M&A Transactions.

SFAS 141- Allocation of Purchase Price.

Fair Values Impact Future Reported Income.

Market Participants.

Choice of Life for Amortization and Depreciation.

Asset Lives.

Lives for Intangible Assets: Indefinite versus Fixed.

Minimizing Reported Income.

Goodwill.

Solvency Opinions.

Chapter 5. Due Diligence: What is the Real Value of the Target's Business?

Financial Projections.

Estimating the Value of Working Capital.

Estimating the Value of Property, Plant, and Equipment.

Estimating the Value of Liabilities.

Estimating the Value and Life of Intangible Assets.

Lives for Amortization.

Goodwill on the Target’s Books.

Estimating the Value of Contingent Liabilities.

Chapter 6. Valuation of Liabilities.

The FASB's Motives for Changing SFAS 5.

Regulatory Response to the Potential for Manipulation.

Auditing of Valuation Reports.

Valuation of Contingent Payments.

Environmental Liabilities.

Chapter 7. Fair Value, Property, Plant,& Equipment, and Sarbanes-Oxley.

Required Controls over PP&E.

Benefits of a Good Property Record System.

Summary and Conclusions.

Chapter 8. Allocation of Purchase Price in a Business Combination.

Adjusted Purchase Price.

Financial Projections.

Fair Value of Working Capital.

Property, Plant, & Equipment (PP&E).

Valuation of Intangibles.

Duplicate Assets- Exit Value and Market Participants.

Chapter 9. Testing for Impairment.

How Does the Market Respond to Impairment Write-Offs?

Can We Control the Timing and Amount of Impairment Charges?

Testing Goodwill for Impairment.

Can You Control Impairment Charges?

Choice of Reporting Unit.

Trade-Off between Assigning Value to Intangibles and to Goodwill.

Summary and Conclusion.

Chapter 10. Customer Relationships.

What is a Customer Relationship?

Defining a Customer Relationship.

How to Interpret the EITF Definition of Customer Relationship.

One Major Customer.

Selling New Products or Services.

Returns on Other Assets.

Testing Customer Relationships for Impairment.

Chapter 11. Selecting and Working with an Appraisal Specialist.

Evaluating an Appraiser's Experience.

Independence and Ethics in Fair Value.

Auditors: Are They the Final Quality Check?

Experience in Your Industry versus Overall Experience.

Reducing Costs- Working with Independent Auditors and the SEC.

SEC Interaction.

Summary and Conclusions.