Hitchner James, Mard Michael. Financial Valuation Workbook
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CHECKLIST 5-41: Auditor Review of Valuation
for Financial Reporting
Client Name: ________________________ Reviewer: ________________________
Date of Value: _______________________ Valuation Type: ___________________
Each item on this checklist is to be reviewed progressively by the responsible audi-
tor and by category as the analyst completes the engagement. Scheduling this pro-
gressive review of the valuation engagement will eliminate surprises at the end of
the engagement, which could cause a delay in issuing the audit. This checklist does
not replace the valuation audit program, but is intended to facilitate communica-
tion between the analysts and the auditors concerning key valuation issues as the
valuation progresses. When completed, this review checklist will ensure the auditor
has completed critical steps in the audit program.
COMPLETED
Analyst Qualifications
❑ Does the analyst have specialized training in business valuation
and intangible assets?
❑ Does the analyst hold the appropriate professional designations
in business valuation, e.g., CPA/ABV, ASA, CBA, CVA?
❑ Can the analyst adequately discuss FASB Statements of Financial
Accounting Standards (SFAS) Nos. 121, 131, 141, 142, 144, and
Financial Accounting Concepts Statement No. 7, and the AICPA’s
best practices guide on In-Process Research and Development?
❑ Does the analyst have adequate experience in valuing intangible
assets?
❑ Does the analyst meet the qualifications for a valuation specialist
per FASB’s SFAS No. 73?
Industry and Company Risks
❑ Does the analyst understand your perception of the industry’s
business and financial risks applicable to the company?
❑ Does the analyst understand your perception of the company’s
business and financial risks?
❑ If the analyst is not familiar with the industry’s business and
financial risks, did they adequately communicate how they would
obtain sufficient relevant knowledge about the industry’s business
and financial risks?
Company Projections
❑ Did the analyst perform a mathematical check of the company
projections?
❑ If so, did they find any mathematical errors?
222 CHECKLISTS
COMPLETED
❑ Can the analyst adequately explain how they tested the
underlying assumptions?
❑ Does the analyst have a list of the assumptions that required
additional analysis or support?
❑ Does the analyst’s risk analysis of the underlying assumptions
correspond with your analysis of the underlying assumptions?
❑ If not, can you reconcile the differences?
Guideline Companies Selected
❑ Can the analyst adequately explain the process used in selecting
the guideline companies?
❑ Does the analyst have a list of considered but excluded
companies?
❑ Are all the guideline companies in the same industry?
❑ If not, can the analyst explain why the guideline companies have
the same investment risk characteristics as the subject company?
❑ Do you agree that the selected guideline companies appear
appropriate?
Discount Rate Development
❑ Did the analyst use the capital asset pricing model?
❑ Did the analyst use the build-up method as a fundamental
analysis?
❑ Did the analyst use the weighted average cost capital?
❑ If so, does the equity portion match either the capital asset
pricing model or the build-up method?
❑ If so, can the analyst justify the selection of the interest rate used?
❑ If so, is the tax rate used in determining the after-tax interest rate
appropriate for the subject company?
❑ If so, can the analyst justify the weighting between the equity and
the debt portions of the weighted average cost capital model?
❑ Does the analyst have supporting documentation for the input
items in the various discount rate development models?
Economic Adjustments
❑ Has the company or analyst identified all the appropriate
nonrecurring economic events or costs?
❑ Can the analyst justify any other economic adjustments made to
the income statements?
❑ If using an adjusted balance sheet method, did the analyst
provide appropriate documentation for the economic adjustments
made to the balance sheet?
Auditor Review of Valuation for Financial Reporting 223
COMPLETED
Allocation of Income to Identifiable Intangible Assets
❑ Has the analyst made a list of identifiable intangible assets
applicable to the subject company?
❑ Does the schedule of income allocation have appropriate
supporting documentation?
❑ Does the schedule of income allocation reconcile to total
company income?
❑ Are there any reasons to disagree with the income allocation
schedule?
❑ If so, have these issues been discussed with the analyst?
Royalty Rates
❑ Does the analyst have a list of royalty rates applicable to each
identifiable intangible asset?
❑ Were the royalty rates derived from a royalty rate survey?
❑ If so, did the analyst present any analysis related to the quality or
the survey?
❑ Did the analyst use the 25% rule in determining the royalty rate?
❑ Were the royalty rates derived from a study of actual licensing
transactions?
❑ Can the analyst adequately explain the selection process used in
determining the guideline licensing transaction?
❑ Can the analyst explain any adjustments to the guideline royalty
rate transactions?
Disclaimer Excluding Any Warranties: This checklist is designed to provide guidance to analysts, auditors, and man-
agement, but is not to be used as a substitute for professional judgment. These procedures must be altered to fit each
assignment. The practitioner takes sole responsibility for implementation of this guide. The implied warranties of mer-
chantability and fitness of purpose and all other warranties, whether expressed or implied, are excluded from this trans-
action and shall not apply to this guide. The Financial Valuation Group shall not be liable for any indirect, special, or
consequential damages.
© Copyright 2002 The Financial Valuation Group, LC. All rights reserved.
224 CHECKLISTS
225
index
Accounting
accrual basis, 95
cash basis, 95, 96
control interest basis, 1, 2, 3, 25, 35,
43, 44, 48
control stand-alone basis, 2, 48
cost basis, 86
direct equity basis, 26, 29, 55, 61
invested capital basis, 25, 26, 29, 30,
56, 61
purchase, 101
stand-alone basis, 46, 62, 68, 77, 79, 118
Adjustments
control, 26, 27, 57, 81
working capital, 29
AICPA
Best Practices Guide, 99
Amortization
benefit, 101
period, 101, 102
Appeals and Review Memorandum 34
(ARM 34), 54
Appraisal, elements of, 5
Appreciation, 3, 63, 88, 92
Arbitrage Pricing Theory (APT), 84
Assets, 5, 13, 17, 18, 19, 20, 21, 23, 24,
26, 27, 35, 40, 41, 53, 56, 57, 58,
72, 78, 81, 82, 84, 85, 87, 88, 95,
96, 99, 100, 101, 102, 105, 106,
108, 109, 115
allocation of, 94
excess, 27, 35
nonoperating, 27, 36, 38, 41, 57, 58,
81, 82, 96, 115
Assumptions, 104
Bankruptcy, 21, 47
Benchmark, 31, 53, 64, 80, 109
Betas, 30, 32, 62, 63, 64, 65, 67, 82, 83
lagged, 65
monthly, 65
relevered, 30, 62
sum, 65
unlevered, 30, 62, 63
Bizcomps, 37, 69
Bonds, 6, 31, 64, 82, 107
20-year maturity rate, 6
30-year Treasury bond, 7, 9, 64
constant maturity, 31
convertible, 107
options, 107
price, 7, 9
yield, 7, 9, 31, 83, 107
Bureau of Labor Statistics (BLS), 8
Business
combination, 101, 105
damages, 103
enterprise, 82, 94, 99, 102
C corporation, 49, 60, 106
Capital
cost of, 58, 67, 84, 88, 110, 111, 112,
118, 119
expenditures, 28, 29, 59, 60, 61, 99,
114, 115, 117
structure, 29, 30, 34, 35, 55, 61, 62,
63, 67, 68, 83, 86, 110, 118
Capitalization rate
risk-adjusted, 25, 29
Cash flow, 23, 24, 25, 27, 28, 29, 31, 35,
36, 46, 50, 54, 55, 56, 57, 58, 59,
60, 61, 63, 64, 68, 69, 73, 78, 79,
81, 83, 87, 90, 95, 101, 107, 109,
110, 111, 112, 115, 116, 117, 118
control, 25, 26, 56, 57, 87
debt-free, 29, 60, 61
discretionary, 37
excess, 24, 54, 82, 84, 96
net, 26, 35, 55, 56, 90, 97
rates of return, 63
Census Bureau of the Commerce
Department, 8
Checklist
business valuation or real estate, 122
intellectual property
procedures for the valuation of
intangible assets, 183
royalty factors, 189
key information requirements, 123
Checklist (cont’d)
valuation review
appraisal review, 216
auditor review of valuation for
financial reporting, 222
compliance with USPAP, 214
contemporaneous, 212
eminent domain, 210
general, 206
Closely held business, 23, 42, 46, 54, 62,
75, 77, 82, 87, 88, 90, 93, 98, 107
Consumer Price Index (CPI), 7
Consumer spending, 8, 11
Cost
of equity, 33
of goods sold, 16
Current assets, 17, 19, 38
accounts payable, 18
accounts receivable, 17, 19, 20
acquisition of, 21, 22
cash, 2, 5, 11, 13, 17, 19, 20, 23, 24,
25, 27, 28, 29, 31, 35, 36, 46, 50,
54, 55, 56, 57, 58, 59, 60, 61, 63,
64, 68, 69, 73, 78, 79, 81, 82, 83,
87, 90, 93, 94, 95, 96, 99, 101,
107, 108, 109, 110, 111, 112, 115,
116, 117, 118
contract receivables, 5, 17
inventory, 57, 115
Damages
calculation, 104
compensatory, 104
Debt, 19, 21, 22, 25, 29, 30, 33, 34, 35,
36, 53, 55, 56, 61, 62, 63, 67, 69,
85, 86, 101, 106, 108, 114, 116, 117
cost of, 21, 29, 33, 66
long-term, 18, 22, 114, 116
securities, 107
Department of Commerce’s Bureau of
Economic Analysis (BEA), 7
Department of Labor (DOL), 93, 94
Depreciation, 27, 28, 29, 59, 60, 61, 114,
117
expense, 27, 28
overhang, 117
Depth of management, 32
Discounts, 33, 34, 36, 41, 46, 75, 78, 83,
97, 99, 101, 104, 107, 108, 109, 119
controlling interest, 4, 27, 30, 35, 38,
42, 46, 48, 49, 57, 58, 62, 67, 68,
69, 70, 74, 75, 77, 78, 81, 88, 118
lack of control, 48, 57, 58, 76, 77, 82,
87, 88, 91
lack of marketability, 42, 43, 45, 46,
48, 58, 74, 75, 76, 77, 78, 88, 91,
107, 109, 110
marketability, 42, 43, 48, 70, 74, 75,
76, 78, 88, 92, 98, 108, 110, 118
minority, 15, 51
trapped capital gains, 88
venture capital, 109
Discretionary items, 95
Distributions, 5, 77, 91, 93, 108
Dividend, 63, 90, 110
income, 27, 57
paying capacity, 5, 90
Done Deals, 37, 69
Dow Jones Average (Dow), 8
Dow Jones Industrial Average (DJIA), 9
Early-Stage Technology Companies, 108
Earnings, 6, 23, 24, 26, 28, 32, 38, 39,
40, 59, 69, 72, 73, 74, 83, 84, 90,
95, 96, 97, 107, 111, 115, 117
ability, 6
capacity, 5
EBIT, 38, 40, 41, 86, 117
EBITDA, 29, 60
pretax, 25, 26, 97, 104, 107
retained, 21, 22, 63
Economic
benefit, 29, 60, 79, 81, 82
conditions, 7, 80
cycle, 16, 52
growth, 10
indicators, 7, 10, 50, 80
outlook, 5
commercial lending, 13
national, 6, 11, 51, 52
regional, 11
Economic Value Added (EVA), 110
Energy index, 8
Enterprise, 5, 6, 23, 82, 84, 90, 97, 101
Equal value, 3, 48, 79
Equity, 8, 18, 21, 22, 30, 66
cost of, 29, 30, 31, 33, 62, 66, 110
cost of capital, 30, 62
markets, 8
multiples, 40, 69
ownership, 107
rate, 33
return on, 40, 71
ESOP, 24, 47, 54, 93, 109
plan provisions, 93
Excess
compensation, 56, 87, 108, 118
returns, 21
226 INDEX
Expenses, 17, 27, 56, 58, 81, 82, 84, 98,
113, 116, 118
noncash, 27, 84
operating, 17
prepaid, 17
S, G & A, 113, 116
Fair market value, 1, 2, 3, 5, 7, 24, 27,
44, 45, 46, 49, 57, 58, 67, 77, 79,
81, 86, 88, 91, 92, 93, 94, 95, 97,
98, 99, 104, 106, 107, 108, 109
Fair value, 3, 48, 49, 93, 94, 99, 100,
101, 104, 105
financial reporting, 3, 48, 49
state actions, 3, 48, 49
Family Limited Partnership (FLP)
closed-end funds, 92
Family Limited Partnerships (FLPs), 90
Federal anti-kickback laws, 97
Federal Reserve Open Markets Committee
(FOMC), 9
Fiduciary responsibility, 91
Financial
markets, 8
positions, 105
reporting, 47, 104, 105, 110, 222
fair value, 3, 48, 49
statements, 15, 40, 52, 80, 84, 86, 87,
89, 95, 96, 112
audited, 6
balance sheet, 5, 18, 37, 57, 58, 81,
108, 115
extraordinary items, 80, 83, 112
fixed assets, 5, 17, 20, 21, 22, 38, 53
fixed costs, 16, 21
nonrecurring items, 26
sales, 20, 21
structure, 32
Financial Accounting Standards Board
(FASB)
SFAS No. 141, 100, 101
SFAS No. 142, 99
Fiscal year end, 59
Flotation costs, 42, 75
Generally accepted accounting principles
(GAAP), 80, 81, 83, 84, 95,
100, 105
Goodwill, 6, 24, 54, 60, 82, 86, 87, 94,
95, 96, 99, 101, 102, 105
entity, 94
impairment test, 99
personal, 94
practice, 96
professional, 96
Gross Domestic Product (GDP), 7, 10, 11,
35, 50, 68, 117
Gross margin, 112
Growth, 7, 8, 9, 10, 11, 12, 13, 15, 16, 25,
32, 35, 36, 39, 50, 51, 55, 61, 68,
69, 71, 82, 84, 85, 86, 93, 98, 99,
109, 112, 114, 116, 117, 118, 119
factor, 35
long-term, 69
potential, 32
rate, 15, 40, 51, 71
annualized, 7
compound, 5, 16
historical, 35, 68
trend, 16
Holding periods, 75
Hoovers Online, 6
Houlihan, Lokey, Howard and Zukin
[HLHZ], 118
Ibbotson Associates, 6, 31, 37, 42, 69,
75, 83, 118
Income, 4, 5, 23, 24, 25, 26, 27, 28, 29,
30, 31, 35, 36, 37, 40, 41, 47, 49,
50, 53, 54, 55, 56, 58, 60, 61, 62,
63, 68, 71, 73, 76, 81, 84, 85, 86,
87, 92, 93, 96, 100, 102, 106, 108,
109, 111, 113, 114, 115, 116
adjusted, 28, 58
after-tax, 28, 60, 61
debt-free, 29, 60, 61
economic, 36
growth rate, 114
measures of value, 41
operating, 113
per capita, 14
pretax, 22, 23, 81, 113
statements, 16
stream, 24, 27
Income Approach Valuation Process
Flowchart, 111
Industry
aggregated, 34, 67
average, 16, 17, 18, 19, 20, 21, 22, 23,
34
growth rate, 35, 68
outlook, 7, 14
risk premia, 83
sectors, 37
similarity, 40, 71
statistics, 18
Index 227
Inflation, 7, 8, 9, 10, 11, 15, 50, 68, 80,
82, 97
long-term, 35
rate of, 8, 10
Institute of Business Appraisers (IBA), 2,
6, 36, 37, 69, 90
Intangible assets, 24, 53, 60, 87, 98, 101,
102, 105, 106
assembled workforce, 102
copyrights, 99
customer base, 32, 101, 102
in-process research and development,
99, 100, 101
intellectual property, 99, 105
know-how, 99
patents, 99
trade names, 102
trade secrets, 99
useful life, 60, 102
Interest, 3, 4, 7, 8, 9, 10, 21, 22, 25, 26,
27, 33, 36, 40, 43, 45, 48, 49, 50,
55, 57, 61, 66, 74, 75, 77, 78, 80,
82, 88, 91, 92, 94, 95, 101, 104,
107, 109, 114, 116
expense, 22, 26, 55, 61, 66
income, 27
minority, 27, 48, 49, 57, 58, 75, 78, 79,
81, 87, 88, 95, 98, 115, 118
rate, 7, 8, 9, 10, 50, 80, 104
Internal planning, 1, 44, 47
Internal Revenue Code
Chapter 14, Section 2703, 91
Chapter 14, Section 2704(a), 92
Internal Revenue Service, 5, 24, 88, 89, 93
Revenue Ruling 59-60, 5, 6, 15, 24, 49,
50, 52, 54, 90, 107
Revenue Ruling 68-609, 24, 54
Revenue Ruling 77-287, 24, 54, 88, 107
Revenue Ruling 83-120, 24, 54, 107
Invested capital
multiples, 69
to assets, 72
to book value, 40, 72
to debt-free cash flow, 40, 72
to debt-free net income, 40, 72
to EBIT, 40, 53, 72
to EBITDA, 40, 53, 72
to revenue, 72
to revenues, 40, 72
Investments, 19
characteristics, 38, 39, 71, 92
return on, 107, 110
value, 3, 48, 49, 81, 104
IPO studies, 42, 75, 88
Iterative process, 34, 66, 67
Key person, 32, 50, 95
Labor markets, 13
Legal issues, 15, 51, 98
Leverage, 18, 21, 22, 53
Liabilities, 18, 22, 38
contingent, 87
current, 19
Limitations, 80
Limiting conditions, 89
Liquidity, 18, 20, 48, 78, 87
Litigation service engagements, 102
Longstaff Analysis, 107
Long-term debt
current portion, 18, 114
Lost profits, 103
calculation, 103
Management Interview
accounting practice, 164
financial review, 161
insurance agency, 166
law practice, 169
medical practice, 172
operations, 156
Management projections, 108
Margins
long-term, 86
Market
dynamics, 92
price, 6, 100
value
capital structure, 30, 62
of equity, 86
of invested capital, 86
Mergers and acquisitions, 97
Mergerstat Review, 37, 42, 69, 75, 118
Methods, 3, 43, 48, 58, 74, 83, 87, 93,
111
adjusted book value, 24
build-up, 31, 62, 63, 64, 67, 83
capitalized cash flow (CCF) method,
25, 28, 29, 35, 36, 43, 50, 54,
55, 57, 58, 59, 60, 68, 69, 78,
84, 115
control excess cash flow method, 82
direct equity, 55
discounted cash flow (DCF), 25, 28, 55,
58, 81, 108, 114
excess cash flow, 24, 54, 82, 84
excess earnings, 54
formula, 24, 54
228 INDEX
guideline company transactions, 6, 23,
36, 38, 39, 40, 71, 85, 86, 110
guideline public company, 25, 34, 40,
54, 66, 67, 71
invested capital, 55
value driver, 82
Minority
cash flows, 26, 56, 87
marketable value, 48
nonmarketable value, 48
oppression (dissolution) actions, 93
ownership, 77
stockholder disputes, 47
Models
Black-Green, 84
Black-Scholes, 109
capital asset pricing model (CAPM), 30,
31, 42, 62, 63, 64, 65, 67, 75, 83
multiple period, 36
Quantitative marketability discount
model (QMDM), 42, 75
Monte Carlo simulation, 109
Multiples
negative, 86
pricing, 85
Net Asset Value (NAV), 92
Normalization adjustments, 56, 112
Open-end mutual funds, 92
Operations, 20
Optimal capital structure, 29, 30, 35, 61,
62, 67, 68, 110
P&L, 56, 58
Partnership
limited, 90, 91, 92
Pass-Through Entities, 106
Performance indicators, 20, 52, 59, 73,
74, 116
Premiums, 41, 51, 64, 65, 66, 87, 93
company-specific, 32
control, 15, 51, 75, 87
insurance, 36
strategic, 87
Present value, 25, 75, 82, 94, 99, 107, 108
technique, 75, 99
Present worth, 36
Price
to assets, 40, 72
to earnings, 40, 53, 72
to equity, 72
to gross profits, 40, 72
Principal, 66
Producer Price Index (PPI), 8
Profit margins, 15, 16, 32, 50, 51, 53, 71,
85, 108, 116
Projections, 16, 36, 52, 81, 97, 98, 116,
118
Proximate cause, 104
Proxy, 62, 83, 85
Purchase price allocation, 106
Qualifications, 104
Qualitative factors, 95
Rate of return, 21, 33, 36, 58, 66, 82, 85,
91, 99, 101
control, 31, 63
minority, 31, 63
risk-free, 31, 64
venture capital, 109
Ratios
activity, 53
asset management, 21
benchmark, 18, 52
collection period, 20
conversion, 107
current, 19
debt to equity, 22
efficiency, 20
financial ratio analysis, 18
fixed assets activity, 20
leverage, 53
liquidity, 19
negative long-term debt to equity, 39
net fixed assets to equity, 21
P/E, 46, 78
pricing, 18, 52, 53, 84
profitability, 22
quick, 19
return on asset, 23
return on equity, 22, 23, 53
Real estate, 12, 81, 82, 88, 106, 116
Real option, 109
Real property, 106
Regulatory issues, 97
Reporting unit, 99, 105
Research and Development, 100
Revenue, 4, 5, 16, 20, 21, 32, 40, 41, 86,
102
actual, 16
base, 16
Index 229
Revenue (cont’d)
gross, 37
growth rate, 113
Revenue rulings
checklist
RR 59-60, 193
RR 77-287, 199
RR 93-12, 204
Risk, 19
unsystematic, 82, 83
Risk Management Associates, 34, 67
Risk premium, 32, 33, 64, 65, 66, 75, 101
10A decile, 32, 64, 65
10B decile, 65
common stock equity, 31, 64
company-specific, 33, 66
stock, 33, 66
S corporation, 4, 28, 49, 60, 106, 107
Safe Drinking Water Act, 14
Scope, 3, 80
Securities, 27, 88, 108
Shareholders
disputes, 47, 49, 77, 92
dissenting rights, 47, 77, 93
minority, 64
preferred, 107
Standard Industrial Classification (SIC)
Code, 16, 18, 39
Standard of value, 2, 5, 79, 92, 93, 94,
98, 104, 105
Statistics
economic, 7
Stern Stewart, 109
Stock, 6, 72, 97, 107, 108, 109
block, 6, 76, 88, 94
blockage, 88
blue chip, 7, 9
buy/sell agreements, 106
common, 1, 2, 3, 4, 31, 44, 64, 106, 107
distribution, 93
dividend terms, 107
exchange, 6, 107
grant price, 107
-holders, 18, 22, 43, 107
indices, 7
composit, 7
Wilshire 5000, 9
letter, 75
markets, 7, 8, 10
micro-cap, 65
options, 109
american, 109
call, 109
european, 108, 109
expiration date, 108
incentive, 109
nonqualified, 109
put right, 94
par value, 107
preferred, 54, 107
premiums, 31, 32, 64, 65
price, 7, 39, 72, 73, 88
repurchase obligation, 93, 94
restricted, 75, 88, 91, 107
technology, 92
transactions, 93
vesting rights, 108
Stocks, Bonds, Bills, and Inflation, 1999
Yearbook, 6
Straight average, 28, 58, 59, 115
Studies
empirical, 66
private placement, 88
Subsidiary, 100
Synergy, 81, 105
Taxes, 28, 29, 40, 57, 60, 66, 88, 89,
106, 107, 113, 116
deferred, 117
estate, 47, 89, 92
gift, 45, 46, 47, 77, 90, 108
how to tax effect, 4, 49
income, 5, 28, 47, 49, 50, 58, 81
liabilities, 5
Term restriction, 91
Terminal year
calculations, 82
value, 81, 82, 118
The Beige Book, 6, 80
The Composite Index of Leading
Economic Indicators, 7
The Federal Reserve Bank, 6, 7
The National Association of Securities
Dealers Automated Quotations
(NASDAQ), 7, 8, 9, 10
The National Economic Review, 6, 7
Transaction Databases, 37, 69, 76, 96
Transfer pricing, 100
Trends, 9, 16, 36, 43, 52, 80, 115
historical, 29, 112
Troy, 34, 67
Unemployment, 10, 11, 15, 50, 51
Uniform Standards of Professional
Appraisal Practice (USPAP), 3, 16,
52, 89
230 INDEX
compliance, 1
noncompliance, 95
Unrealized gains, 27
Valuation
approaches, 23
cost, 23, 53, 54, 78, 86, 87, 90, 100,
101, 102
income, 23, 25, 26, 30, 35, 50, 54,
55, 56, 61, 62, 68, 71, 73, 76, 81,
84, 86, 87, 102, 109, 111, 116
market, 6, 23, 24, 38, 53, 54, 61, 73,
84, 85, 86, 87, 90, 100, 109, 117
concepts in, 1
conclusions, 48
minority, 55, 67
multiples, 40, 41, 49, 53, 72, 73, 74,
83, 86, 98
report, 1, 3, 5, 80, 89, 95, 103, 219
Valuation date, 47, 89
Valuation Information Request
accounting practice, 130
bank/holding company, 132
eminent domain, 138
ESOP, 140
gas and oil rights, 141
general, 124
high tech business, 142
intellectual property
copyright, 175
customer relationships, 176
in-process research and development,
177
know-how, 178
patent, 179
proprietary processes/products
technology, 181
software, 180
trademark/trade name, 182
law practice, 144
medical practice, 154
partnership, 146
professional practice, 148
services, 151
Value, 2, 47, 48
book, 5, 18, 24, 67, 69, 72, 85, 86
carrying, 99
control, 4, 27, 30, 49, 56, 57, 61, 62,
94, 112, 118
control stand-alone, 48
control synergistic, 48
driver, 79, 87, 118
going concern, 79
intangible, 6
intrinsic, 3, 48, 49
levels of, 2, 48
liquidation, 23, 79
market, 2, 3, 5, 24, 29, 30, 48, 63, 67,
79, 85, 86
multiples, 23
operations, 27
range of, 2, 47, 48, 86
transferable, 95
Value Driver Formula (VDF), 118
Variable costs, 98
Wall Street Journal, 82, 83, 84
Water Resources Act, 14
Weighted average cost of capital, 25, 29,
30, 34, 59, 61, 66, 67, 82, 100,
115
Working capital, 29, 61, 69, 86, 100,
114, 116, 117
incremental, 61
Index 231