A PROFESSIONAL DEVELOPMENT JOURNAL for te CONSULTING...
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3 A PROFESSIONAL DEVELOPMENT JOURNAL for the CONSULTING DISCIPLINES the value examiner November/December 2014 The Anatomy of Employee Stock Options Lack of marketability Early exercise Extremely long duration Vesting and risk of forfeiture Performance conditions Market conditions On The Cover In This Issue… 8 A LOOK BACK AND A LEAP FORWARD By Nancy McCarthy, Senior Editor e year has gone swiftly, as most of them do, and has had its share of challenges and high-points. e end-of-year editorial is an opportunity to review the past and look forward to the future. LOST PROFITS SERIES: PART THREE—LEGAL CONSIDERATIONS IN EVIDENCE AND ADMISSIBILITY By Bruce Clements, PhD, Esq., CPA In this, the third installment of the series on Lost Profits, Dr. Bruce Clements discusses commercial damages litigation. Proving the amount of damages from an act of the defendant is one of the most difficult elements of a case. is article focuses on the first hurdle— admissibility of the expert’s opinion, including the evidentiary process and admissibility rules under the Supreme Court’s 1993 Daubert decision and Rule 702 of the Federal Rules of Evidence. HOW TO SELECT A CASE APPROPRIATE MEDIATOR By Nancy Neal Yeend, Mediator Mediation is a dispute resolution process that is now more popular than arbitration. Many contracts require parties use mediation if a dispute arises, and courts have adopted the use of mediation to help reduce the number of cases headed to trial. e author discusses how selecting a case appropriate mediator saves resources and increases the probability of settlement. THE PERSONAL SIDE OF MEDIATION Value Examiner Interview with Michael Goldman, MBA, CPA, CVA, CFE, CFF Michael Goldman, is a principal of Michael Goldman and Associates, LLC, in Deerfield, Ilinois. His practice focuses on matters relating to fraud, valuation, and insolvency. In this Value Examiner Q&A, Michael Goldman shares his insights on mediation. 6 16 24 28 Employee Stock Options: What Valuation Analysts Should Know By Keith Sellers, PhD, CPA/ABV; Brett King, PhD; and Yingping Huang, PhD Employee stock options (ESOs) are a common form of compensation offering unique challenges to valuation professionals. In the September/October 2012 edition of e Value Examiner , the authors provided a basic foundation in option valuation models, exposing some critical features, limitations, and the key assumptions upon which they are based. In this article, the authors build on that foundation by addressing the specific attributes of ESOs that complicate the valuation process.
Transcript of A PROFESSIONAL DEVELOPMENT JOURNAL for te CONSULTING...
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A P R O F E S S I O N A L D E V E L O P M E N T J O U R N A L f o r t h e C O N S U L T I N G D I S C I P L I N E S
the value examiner November/December 2014
NOVEMBER/DECEMBER 2014
The Anatomy of Employee Stock Options
Lack of marketability
Early exercise
Extremely long duration
Vesting and risk offorfeiture
Performance conditions
Market conditions
ValEx Nov/Dec Cover.indd 1 11/12/14 9:33 AM
On The Cover In This Issue…
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A LOOK BACK AND A LEAP FORWARDBy Nancy McCarthy, Senior EditorThe year has gone swiftly, as most of them do, and has had its share of challenges and high-points. The end-of-year editorial is an opportunity to review the past and look forward to the future.
LOST PROFITS SERIES: PART THREE—LEGAL CONSIDERATIONS IN EVIDENCE AND ADMISSIBILITYBy Bruce Clements, PhD, Esq., CPAIn this, the third installment of the series on Lost Profits, Dr. Bruce Clements discusses commercial damages litigation. Proving the amount of damages from an act of the defendant is one of the most difficult elements of a case. This article focuses on the first hurdle—admissibility of the expert’s opinion, including the evidentiary process and admissibility rules under the Supreme Court’s 1993 Daubert decision and Rule 702 of the Federal Rules of Evidence.
HOW TO SELECT A CASE APPROPRIATE MEDIATOR
By Nancy Neal Yeend, MediatorMediation is a dispute resolution process that is now more popular than arbitration. Many contracts require parties use mediation if a dispute arises, and courts have adopted the use of mediation to help reduce the number of cases headed to trial. The author discusses how selecting a case appropriate mediator saves resources and increases the probability of settlement.
THE PERSONAL SIDE OF MEDIATIONValue Examiner Interview with Michael Goldman, MBA, CPA, CVA, CFE, CFFMichael Goldman, is a principal of Michael Goldman and Associates, LLC, in Deerfield, Ilinois. His practice focuses on matters relating to fraud, valuation, and insolvency. In this Value Examiner Q&A, Michael Goldman shares his insights on mediation.
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Employee Stock Options: What
Valuation Analysts Should Know
By Keith Sellers, PhD, CPA/ABV; Brett King, PhD; and Yingping Huang, PhD
Employee stock options (ESOs) are a common form of compensation offering unique challenges to valuation professionals. In the September/October 2012 edition of The Value Examiner, the authors provided a basic foundation in option valuation models, exposing some critical features, limitations, and the key assumptions upon which they are based. In this article, the authors build on that foundation by addressing the specific attributes of ESOs that complicate the valuation process.
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A P R O F E S S I O N A L D E V E L O P M E N T J O U R N A L f o r t h e C O N S U L T I N G D I S C I P L I N E S
the value examinerNovember/December 2014
E D I T O R I A L S T A F FCEO & Publisher: Parnell Black
Senior Editor: Nancy J. McCarthyEditorial Advisor: David M. Freedman
Assistant Editor: Karie Anderson
E D I T O R I A L B O A R DChairman:
Lari B. Masten, MSA, CPA, ABV, CFF, CVA, ABAR, MAFF
Past Chairman: Michael Goldman, MBA, CPA, CVA, CFE, CFF
Ashok Abbott, PhDEric J. Barr, CPA/ABV/CFF, CVA, CFE
John E. Barrett, Jr., MBA, CPA/ABV, CVA, CBA Neil J. Beaton, CPA/ABV/CFF, CFA, ASA
Rod P. Burkert, CPA/ABV, CVA, MBARichard R. Conn, CMA, MBA, CPA/ABV, ERP
Wolfgang Essler, CVA (Germany)Andrew M. Malec, PhD
Sarah von Helfenstein, MBA, CVASusan Yahong Yi, CPA, CVA
The Value Examiner® is a publication of:National Association of CertifiedValuators and Analysts (NACVA)
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S U B M I S S I O N D A T E SIssue Submission Dates Publish DatesMar/April 2015 Jan. 15. April 1, 2015May/June 2015 Feb. 15 June 1, 2015July/Aug 2015 Mar. 15 July 1, 2015Sept/Oct 2015 April 15 Sept. 1, 2015Nov/Dec 2015 May 15 Nov. 1, 2015
A L L S U B M I S S I O N SThe Value Examiner is devoted to current, articulate, concise, and practical articles in business valuation, litigation consulting, fraud deterrence, matrimonial litigation support, mergers and acquisitions, exit planning, and building enterprise value. Articles submitted for publication should range from 500 to 3,000 words. Case studies and best practices are always welcome.S U B M I S S I O N S T A N D A R D SAll articles should be thoroughly edited and proofread. Submit manuscript by e-mail (in standard word processing format) to Nancy McCarthy: [email protected]. Include a brief biography to place at the end of the article and a color photo of the author. See authors’ guidelines and benefits at www.nacva.com/examiner/Publishing_Articles.pdf. The Value Examiner accepts some reprinted articles, if accompanied by appropriate reprint permission.R E P R I N T SMaterial in The Value Examiner may not be repro-duced without express written permission. Article reprints are available; call NACVA at (800) 677-2009 and/or visit the website: www.NACVA.com.
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A C A D E M I C R E V I E W
CONTEMPORARY RESEARCH IN VALUATION AND FORENSIC ACCOUNTINGGuest Editor: Peter L. Lohrey, PhD, CVA, CDBV
Summaries of contemporary research in valuation and forensic accounting selected from numerous academic research outlets that illustrate the core of this novel research.
L I T I G A T I O N C O N S U L T I N G
COURT CORNERBy Peter Agrapides, MBA, CVA
Summaries and analysis of the most important cases that involve valuation and expert testimony issues, in both federal and state courts.
P R A C T I C E M A N A G E M E N T
PRACTICING SOLOBy Rod P. Burkert, CPA/ABV, CVA
The author interviews sole practitioner John Janicek, CPA/ABV, CFF, CVA, FCPA, from Hendersonville, Tennesse.
ALSO: CHRONICLES OF A START-UP
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