Hello
Welcome to the latest issue of Valuation and Litigation Insights!
We bring you useful information related to business valuation and litigation that will help you and your clients get better results.
Artificial Intelligence (AI) is showing up everywhere. Yet some industries, like accounting, are slower than others to adjust. We share implications for this industry.
AI has become a useful tool for professional report writing, though supervision is required. We share an article that discusses some best practices.
Badly-written buy-sell agreements can be a full employment act for valuators and expert witnesses. We share five errors that keep us employed.
Economic damages can be quantified on an ex-ante, or before the event, or ex-post, or after the event, with the former not allowing information obtained in hindsight. We look at the pros and cons of each approach.
On 5/23/24, the Business Valuation Institute of the United Kingdom (BVIUK) holds its 3rd virtual expert summit, and I am fortunate to be participating. Sign up information provided.
On to this issue!
Valuation and Litigation Insights
News and Trends
Accounting's Reluctant AI Revolution
Can being too cautious actually result in more risk?
Well, going too slow on a freeway is never a good idea.
For better or worse, artificial intelligence in general, and generative AI in particular, is at the forefront of many innovations in professional services.
It does appear, however, that the accounting profession is lagging in deploying the new technology. This is probably a surprise to no one, given the conservative nature of most CPAs.
In the meantime, however, competing financial services sectors are adapting to generative AI at a much faster rate.
This, in turn, increases the risk of outside disruption if the accounting profession cannot keep up.
Read more in the article below.
accountingtoday.com
Using Artificial Intelligence Tools in Professional Report Writing
ChatGPT and similar AI programs present a tremendous opportunity for valuation specialists, forensic accountants, and other professionals to boost productivity.
Yet at this point, while ChatGPT can save time, it can also generate output that is biased or downright wrong. Worse, its tendency to present erroneous content as factual can be a real problem -- especially if it creeps into work product that requires a high degree of accuracy, such as a valuation report or expert opinion.
The authors of the article below explore how ChatGPT can be a valuable tool, a few of its strengths and weaknesses, concerns, and the implications it has for the world of professional writing and content creation.
How have you used AI in your work flow?
quickreadbuzz.com
Things to Know
5 Mistakes Overlooked in Buy/Sell Agreements
What are five often overlooked mistakes in buy-sell agreements that end up can being very costly to the parties? The article below lists the following (my additions in parentheses):
- A stale (or no) valuation
- Retaining multiple appraisers (not sure a mistake, but costly)
- Using a formula method (often does not work out as originally intended)
- Not properly funding life insurance (the structure of the deal might also result in an undesired tax consequence - see the recent Connelly case that went in front of the Supreme Court )
- Using the wrong standard of value (I would also add vague or inconsistent language regarding the standard of value can cause loads of problems)
See the article below for more details.
Do you or your client have a dusty old buy-sell agreement that could use examination?
tbccpa.com
Ex-Ante Versus Ex-Post Damages Calculations
In a typical business litigation involving damages, there is a lag -- sometimes a long one -- between the date of the wrongful act and the date of trial (or the date damages are quantified). During this time, things can happen which might significantly change one's view on the financial losses incurred.
Damage experts know that the above difference in dates gives rise to two ways of computing damages:
1) An ex ante, or "before the event" calculation, only considers what is "known or knowable" up to the date of the wrongful act. 2) An ex post, or "after the event" calculation, uses information up to the date of trial, and hence consider actual outcomes after the date of the wrongful act.
Depending on the circumstances, the ex ante and ex post approaches might yield very different damage numbers.
But they can't both be right, can they?
This article provides some interesting examples of the ex-ante and ex-post approaches, and the advantages and disadvantages of each.
quickreadbuzz.com
Upcoming Events
BVIUK 3rd Virtual Expert Summit: Standards and Education
On May 23, 2024, 18:00 British Standard Time, the BVIUK (Business Valuation Institute of the United Kingdom) will be presenting a virtual summit where noted practitioners will discuss the following topics:
- Impact of International Valuation Standards (IVS) Adoption on Valuation Practices.
- Challenges and Opportunities in Implementing country - specific Valuation Standards.
- Bridging the Gap Between Theory and Practice. How can BV practitioners and BV academics work together for a common purpose?
- Business Valuation Accreditation Programmes in the UK: Present and Future Trends.
I am looking forward to participating in what will be a very interesting exchange of ideas on topics that are vital to the valuation profession!
Click the link to register and attend!
lnkd.in
In Closing
That's it for now. If you found this issue of Valuation and Litigation Insights useful, please forward it to a friend or colleague.
And if you have a valuation or damages-related issue you would like to discuss, let me know! Our team at at Grobstein Teeple, LLP are here to help.
You can reach me one of the ways below.
Talk to you soon!
Will
William W. Thomsen
Director of Valuation and Litigation Services
Grobstein Teeple, LLP
www.gtllp.com
Call me at 818-502-4950
Valuation and Litigation Insights