Preface ix
Chapter 1 Introduction 1
The Troubled Company Continuum 1
Operational and Financial Disstress 3
The Troubled Company Response 3
Valuation in Reorganization or Bankruptcy 5
Conclusion 6
Chapter 2 Industry Practitioners and Standards 7
Professional Organizations and Business Valuation Standards 7
Business Valuation Practitioners and Certifications 14
Conclusion 19
Notes 19
Chapter 3 The Basics of Business Valuation 21
The Purpose of the Valuation 21
Standard of Value 22
Premise of Value-Going Concern or Liquidation 23
Valuation Approaches 25
Fundamentals 29
Conclusion 38
Notes 38
Chapter 4 Income Approach 39
Discounted Cash Flow Method 41
Capitalized Cash Flow Method 57
Conclusion 58
Note 59
Chapter 5 Market Approach 61
Guideline Company Method 61
Comparable Transaction Method 73
Conclusion 81
Chapter 6 United States Bankruptcy Code 83
Introduction to the Structure of the Bankruptcy Code 83
Commencement of a Bankruptcy Case and Filing of Schedules 84
Chapter 7 of the Bankruptcy Code 85
Chapter 11 of the Bankruptcy Code 85
Avoiding Powers under the Bankruptcy Code-Preferences 94
Avoiding Powers under the Bankruptcy Code-Fraudulent Transfers 95
Valuation Principles from the Bankruptcy Courts 95
Conclusion 96
Notes 96
Chapter 7 Valuations in Bankruptcy as of the Date of the Hearing 97
Introduction 97
Relief from the Automatic Stay and Adequate Protection 98
§ 363 Sales 100
Use of Cash Collateral 105
Disclosure Statement 105
Plan Confirmation-Feasibility 105
Plan Confirmation-Best-Interests-of-Creditors Test 106
Plan Confirmation-Cram Down 106
Conclusion 111
Notes 111
Chapter 8 Valuations in Bankruptcy at a Time in the Past-Avoidance Actions 121
Overview 121
Avoidance Actions-Preferences 121
Avoidance Actions-Fraudulent Transfers 123
The Applicable Legal Tests for Insolvency 128
Insolvency Test: Valuation of Debts 129
Insolvency Test: The Valuation of Assets 132
Proof of Insolvency by Retrojection 135
The Insolvency Test: Comparing Assets and Debts 135
Is the Public Market's Assessment in the Past Conclusive Proof of Solvency, Even If the Company Later Fails? 135
Use of Hindsight in the Valuation Process 136
Conclusion 143
Notes 143
Chapter 9 Solvency Opinions 149
Introduction 149
Who Uses Solvency Opinions? 149
Solvency Opinion Preparation 151
Solvency Metrics 153
Case Studies 155
Conclusion 157
Notes 157
Chapter 10 Daubert 159
Challenges to Experts or Their Testimony 159
Lack of Relevance 171
Practical Lessons from Daubert Cases for Experts and Lawyers 171
Conclusion 173
Notes 173
Appendix
AICPA Statement on Standards for Valuation Services No. 1, Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset 179
Index 255
