Valuing Pass-Through Entities

Praise for Valuing Pass-Through Entities

"By any metric, the valuation process is a complicated enterprise. This book, however, elucidates this exercise, making it comprehensible to the seasoned veteran and the beginner alike. Replete with examples, this invaluable resource would be useful for any practitioner in the field."
—Jay A. Soled, JD, LLM, Director, Rutgers University Masters in Tax Program

"From time to time in our field, a seasoned professional provides us with a fresh set of perspectives on a worn topic that causes us to think more deeply about what we do. Valuing Pass-Through Entities is such a book. Written in a lucid, accessible style, this book provides both a comprehensive treatment of tax rules and tax court rulings and their effect on pass-through entities and a carefully considered, clearly illustrated approach to using the Delaware MRI valuation formula. A satisfying read with a wealth of food for thought and practice!"
—Sarah von Helfenstein, Founder and CEO, Value Analytics & Design LLC

"Eric takes us on a logical journey that allows us to better understand how the specific ramifications of state and federal tax law impact the decision to tax affect pass-through entities. He takes us from the Delaware Chancery's decision in the Delaware Open MRI Radiology case to his Modified Delaware MRI Model (MDMM). This new and cogent methodology is well explained and thought out. He provides reasoning and explanations for us to follow in order to incorporate the MDMM in our valuation report. He also provides an extensive checklist to guide us through the exercise and calculations. This will enable us to form and perfect this particular 'art' to arrive at a better conclusion of value with a supportable process."
—Ronald D. Rudich, Senior Director of Business Valuation and Litigation Support, Gorfine, Schiller & Gardyn, P.A.

"Eric Barr has written an excellent book examining the valuation of pass-through entities. The book includes a detailed history of corporate and individual tax rates and presents a Modified Delaware MRI Model very useful to valuation analysts. Additionally, the book includes an insightful chapter on the value to the holder standard of value. The book also presents practical case studies beneficial to practitioners in applying the MDMM analysis."
—John E. Barrett, Jr., CPA, ABV, CBA, CVA, Barrett Valuation Services, Inc.

The clarity and guidance valuation analysts have been thirsting for

The business appraisal community regularly names the valuation of pass-through entities as a major issue of concern. Courts, appraisers, and the IRS have long been at odds on the topic, and the contention within the appraisal community itself over methods and inputs further complicates the issue. Valuing Pass-Through Entities provides clarity for the analyst tasked with valuation, offering clear explanations of the different perspectives and approaches to the process.

Valuing Pass-Through Entities cuts through the chatter to:

• Explain the advantages and limitations of different types of pass-through entities

• Analyze the different viewpoints currently dividing the appraisal community
• Gain a fresh perspective on landmark cases
• Explain how to properly utilize a court-tested model
• Examine detailed sensitivity analyses of different inputs under the income and market approaches

The book includes illustrative examples, templates, and a useful technical supplement, plus case studies that demonstrate the real-world effects of various pass-through entity valuation methods and inputs. Detailed analyses and an easy-to-apply model simplify the process while positively affecting outcomes. The companion website provides the text of landmark court decisions, a blog featuring industry trends and tidbits, additional articles, and the insight of the author and other industry leaders.

Valuation requires the successful juggling of multiple variables, many of which can have a major impact on value. Analysts need to know how to balance each factor and apply the appropriate rates and discounts, but a lack of standard practice often leaves the issue too subjective. Valuing Pass-Through Entities clears the air, providing real-world guidelines and tools.