Calculating DLOMs for Minority and Controlling Interests & How to Value Privately Held Promissory Notes
OL1304 | On Demand Course | Update | Self-Study
Description
The purpose of this presentation is to examine the leading edge techniques for calculating DLOMs for minority and controlling interests. For controlling interests, we will evaluate the pros and cons of applying a DLOM and what data is available to support DLOMs. For minority interests, we will examine both the qualitative methods and the quantitative methods for determining DLOMs and look at court scrutiny of the methods. By the end of the presentation, we will learn why the rate of return of an investment is critical to support an adjustment for lack of marketability and how to quantify, calculate and defend your discount for lack of marketability.
Privately held promissory notes need to be valued for gift/estate tax purposes as well as related party transactions. However, the use of corporate bonds from publicly traded companies to determine an interest rate are not comparable because publicly traded companies are large, diversified and represent much lower risk. Business Development Corporations (BDCs) are publicly traded entities that make loans to small and medium size privately held businesses. BDC rates can be used to accurately calculate a market interest rate. This presentation discusses the issues with privately held promissory notes, how to value them using BDC rates and presents real world examples to illustrate the methodology.
This course is part of the 2024 Forensic and Valuation Services Conference Bundle. Purchase the conference bundle here.
Credits
| Number of Credits | Type of Credits |
|---|---|
| 2.00 | Accounting |
Prices
- Member (Early Bird)
- $79.00
- Non-Member (Early Bird)
- $109.00
- Member
- $79.00
- Non-Member
- $109.00
Instructors
Bruce A. Johnson, ASA
Bruce A. Johnson, ASA specializes in valuation services for gift and estate tax planning, sale transactions, profit sharing plans, C Corporation conversions and shareholder disputes. He also has widespread experience providing consulting services to buyers and sellers involved in mergers and acquisitions including assisting clients throughout the sale process. He has 25+ years of experience in the valuation of businesses in industries such as manufacturing, auto dealerships, hospitality, professional sports, food services, distribution, retail and real estate. In addition to earning a degree in Engineering and MBA from Texas A&M University, Bruce is an Accredited Senior Appraiser (ASA) of the American Society of Appraisers where he serves on the audit tax, marketing and education committees.
He is an instructor and course developer for Partnership Profiles "Valuing Family Limited Partnerships" seminars and was the expert witness for the taxpayer in the Estate of Elsie J. Church and Estate of Emily Klauss. He is an elected member of the ASA Board of Governors and a board member of the Texas A&M University Corporate Finance Program.
He is a co-author of the Comprehensive Guide for the Valuation of Family Limited Partnerships. He is a frequent speaker on valuation issues and has been published in over 30 journals on a wide range of business valuation topics including the appraisal of Family Limited Partnerships, Promissory Notes and Discounts for Lack of Control and Lack of Marketability.
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