Category Archives:

A Universal Valuation Model for Closely Held Businesses

by C. Donald Wiggins, D.B.A., ASA, CPA, CVA
Dilip D. Kare, Ph.D.
Jeff Madura, Ph.D.


“…if the appraiser accepts four basic tenets, the only logical conclusion that can be reached is that there is only one valuation model and that all others are simply variations on a single theme with differing assumptions. These tenets are straightforward and should be non-controversial. They are: 1. Investors will only pay for future expected returns from an investment; 2. The return that investors are seeking is cash; 3. Money has time value; and 4. Investors are risk averse. Each of these assumptions is intuitively appealing and supported by widely accepted economic theory, empirical research, and common sense. This article presents the arguments in support of these tenets, the universal valuation model that results from them, and mathematical proofs of the model’s equality with other widely used valuation models.”

The Economic Impact of Taxes on S Corporation Values

by C. Donald Wiggins, D.B.A., ASA
S. Mark Hand, CPA
Laura L. Coogan
Business Valuation Review


“One of the most highly debated topics in business valuation is the treatment of income taxes in valuing S corporations. There are two extreme positions on this point. The first is to include no income taxes at all in S appraisals. The second is to fully tax the income stream of S corporations and, in effect, to treat them as C corporations. This article discusses the treatement of income taxes in the valuation of S corporations and recommends a treatment different from both of these approaches. It describes a methodology that takes into account the tax advantage of S corporations and demonstrates an economically appropriate and supportable tax effect.”

Revisiting Valuation of Real Estate Partial Interests: Recent Case Studies

by C. Donald Wiggins, D.B.A.
Sidney B. Rosenberg, Ph.D.
The Appraisal Journal


“Valuing partial interests, such as common tenancies, is one of the more difficult assignments in appraising property interests. There are usually few comparable sales, a myriad of complex issues revolving around the rights of the owner, and a likelihood of litigation. While the Tax Court generally supports substantial discounts, the Internal Revenue Service consistently maintains that the only allowable discount is the direct cost of partitioning the property. In this article, we cite three cases in which the appraiser discounted the value of the partial interest by using the time and costs of partitioning the property and the cost of marketing the interest.”

Intra-year Cash Flow Patterns: A Simple Solution for an Unnecessary Appraisal Error

by C. Donald Wiggins
B. Perry Woodside
Dilip D. Kare
The Journal of Real Estate Appraisal and Economics


“As they are commonly described in the literature and applied in practice, appraisal techniques have a built-in conceptual error. This error occurs because of the clearly unrealistic assumption that annual cash flows occur at the end of the respective years of a property’s or business’s life. This article discusses the problem as it relates to the various cash flow patterns encountered in income property and closely held business appraisals and develops a theoretically sound, simple adjustment to correct it.”

How to Estimate the Effect of a Stock Repurchase on Share Price

by Dilip D. Kare, Ph.D.
C. Don Wiggins, DBA
Management Accounting


“Before a company decides to repurchase any of its stock, financial decision-makers need to analyze possible effects on the stock’s price per share. If a company’s financial managers follow our practical, relatively simple, conceptually sound tool, they can estimate the minimum repurchase necessary to avoid a negative effect on share price.”