• June 15th – Nailing Down the Numerator in the Discounted Cash Flow Method
• July 25th – Two-Part Presentation: Alternative Methodologies for Lost Profits Damages & Ex Ante v. Ex Post

June 15, 2023, 1:00 – 3:00 pm EDT

Nailing Down the Numerator in the Discounted Cash Flow Method

Countless books, presentations, and methods detail how to determine the cost of capital – the denominator – to be used in the discounted cash flow method of valuing a business. While valuation professionals can debate into perpetuity about basis points in the discount rate, we often overlook factors in the cash flow stream – the numerator – that can have a much more significant impact on the value of the company.

This presentation will discuss the importance of determining a reasonable and reliable projected cash flow stream when implementing the DCF method and ways to test the reasonableness of the forecasts or projections provided by management relied upon in your DCF calculation.

Learning Objectives:

In this webinar, the participants will learn:

• How to differentiate between a forecast and a projection
• The importance of using a reliable cash flow forecast or projection in applying the discounted cash flow method of valuation
• How to review or assist with the preparation of a forecast or projection to ensure the underlying assumptions are valid
• How to evaluate the specific risk to the overall valuation that should be considered given the status of the forecast or projection
• Lessons from court cases regarding the use of forecasts
• What our business valuation standards say about the use of prospective financial information in valuations

Handouts:

• VPS webinar PowerPoint slides
• Following the webinar, attendees will have access to a video recording of the program.

About the Presenters:

Jim Alerding, CPA/ABV

• Owner, Alerding Consulting, LLC 
• Coauthor, Discount for Lack of Marketability Guide and Toolkit  
• Coauthor, Financial Valuation Applications and Models, 4th edition  
• Former member, of the AICPA BV Committee 
• Former member of the AICPA BV Standards Writing Task Force 
• Inductee in the AICPA BV Hall 

Carli D. Lehr, CPA, CVA, CSEP

• Director, BSSF Valuation and Litigation Consulting
• Assist clients with business valuations for exit, succession and estate planning; sale or purchase of a business; and gift and estate tax planning. 
• Provides litigation support services to clients and attorneys, including business valuations and equitable distribution and child and spousal support calculations in divorce matters and shareholder disputes.
• Certified Specialist in Estate Planning (CSEP)

July 25, 2023, 1:00 – 3:00 pm EDT

Two-Part Presentation: Alternative Methodologies for Lost Profits Damages & Ex Ante v. Ex Post*

Alternative Methodologies for Lost Profits Damages

This presentation highlights alternative approaches for estimating but-for financial activity: the yardstick approach; the before-and-after approach; sales projection approach; and market share approach. The strengths and weaknesses of each methodology will be explained.  The financial expert’s role in causation will be discussed as well as a comparison of risk-free and risk-adjusted discount rates to business damages analyses.

Learning Objectives:

In this webinar, the participants will learn:

• To understand the difference between the four approaches and their relative strengths and weaknesses
• When the application of each approach is appropriate, and inappropriate
• How the financial expert witness can assist in the issue of  causation
• The conceptually appropriate approach to discounting future lost profits in business damages analyses

About the Presenter:

Brian Brinig, JD, CPA, ASA

• Managing Director, CBIZ
• Past President, Financial Analysts Society of San Diego
• Past Officer of National Business Valuation Committee of the American Society of Appraisers
• Adjunct Professor, University of San Diego School of Law, Finance & Accounting (1997 to present)
• American Arbitration Association – Commercial Arbitrator (1995 to 2017)
• Member, Litigation Services Committee, California Society of Certified Public Accountants, 1985-2016 (Past Chair – San Diego Chapter; Past California Chair – Business Valuation Section)
• Author, Lost Profits Damages: Principles, Methods, and Applications, 2^nd edition

Ex Ante v. Ex Post

Lost profits damages can be determined as of the date of injury or the date of trial, sometimes referred to as ex ante and ex post approaches. Lost profits determinations under the ex ante and ex post approaches include consideration of (1) events subsequent to the date of the violation, (2) discounting lost future profits to present value, (3) prejudgment interest and (4) accounting for risk.  

Risk assessments in substantially all economic damages cases is a hot-button topic.  This presentation explores alternative approaches to risk assessments in damage models, including a new concept, the “Parity Model.”  

Learning Objectives:

In this webinar, the participants will learn about:

• The origins of ex ante and ex post concepts, and their application in economic damages litigation
• An introduction and explanation of the “Parity Model” in Chapter 3 of Lost Profits Damages: Principles, Methods, and Applications, 2nd Edition
• How to synthesize the following concepts: (1) Ex Ante & Ex Post, (2) Discounting, (3) Prejudgment Interest (“PJI”), (4) the Parity Model; (5) accounting for risk in damage determinations
• Practice tips for lost profits damages litigation

Handouts:

• VPS webinar PowerPoint slides
• Following the webinar, attendees will have access to a video recording of the program
• * Webinar purchase includes coupon code for 20% discount on the purchase of Lost Profits Damages: Principles, Methods, and Applications, 2nd Edition

About the Presenter:

Peter Schulman, CPA, CIRA, CDBV

• Founder, Schulman & Company, LLC
• Experienced in economic damages, bankruptcy & restructuring, and asset tracing (principally in financial crime and complex divorce cases)
• Over 50 years of diversified experience as a certified public accountant (CPA) with a subspecialty in computer systems consulting, including over 40 years of experience as a testifying expert
• Author, Lost Profits Damages: Principles, Methods, and Applications, 2^nd edition

Jim Hitchner’s Valuation Products and Services (VPS) provides tools to assist practitioners in business valuation, litigation services, and forensics and fraud.

Valuation Products and Service, LLC is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Web site: www.nasba.org.