Appraisal Economics has determined the equity value of a coffee roasting franchise. The company has multiple retail locations and a large wholesale segment. We determined the business enterprise value and the corresponding equity value of the company using the discounted cash flow method of the income approach and the guideline company method of the market approach. Key issues included the potential effects of tariffs on the coffee industry and the possibility of expansion through additional franchise locations. The results of our analysis were used for management planning purposes.

Learn more about business valuation and our work in the food and beverage industry.

Appraisal Economics has determined the fair market value of Super Bowl tickets for charitable donation purposes.  When valuing the tickets, we consider the price paid by the donor as well as the asking sale prices for tickets listed on secondary marketplaces that are closest to the tickets being valued in terms of location and proximity.  Although the purchase price can be a reasonable indication of fair market value since it represents a transaction without any compulsion or time constraints and reflects the actual premium nature of the seats underlying the tickets, the number of days that have passed between the purchase date and the donation date must be considered as supply and demand factors may have changed during that time.  The comparable tickets from secondary marketplaces provides a stronger indication of fair market value as it reflects the supply and demand situation for the tickets on the donation date.

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Appraisal Economics has valued accelerated barrier notes linked to the returns of the S&P 500 Index. The notes are complex securities that provide upside leveraged returns in excess of the S&P 500, while providing barrier protection for part of the downside. Appraisal Economics has a deep understanding of the option pricing models used in valuing complex securities and derivative instruments such as the barrier notes. We valued the barrier notes using modified Monte Carlo simulation combined with a credit analysis of the issuer, considering the complex relationship among the underlying assets, the barrier levels, and market conditions.

Appraisal Economics has provided an executive compensation analysis for the senior executives of a large privately held business.  Our compensation study considered the total value and components of appropriate compensation packages, considering the internal characteristics and goals of the subject company, the compensation for executives of similar private companies and public companies within the subject company’s industry, and executive compensation practices among both private and public companies.  Our compensation analysis provided recommendations for alternate compensation structures, including base salary, bonuses and other short-term incentives, and long-term compensation, including performance awards structured to align compensation with company goals and performance.

Appraisal Economics has valued bankruptcy claims on the assets of FTX Trading Ltd.  FTX was a large cryptocurrency exchange and trading platform that abruptly collapsed and filed for bankruptcy and whose CEO, Sam Bankman-Fried, was found guilty of fraud and money laundering.  The bankruptcy trustee is working to find and collect FTX assets to provide to FTX’s clients and victims.  Those who are unable or unwilling to wait for the ultimate outcome of the bankruptcy proceedings can sell their claims to investors with more risk tolerance.  The value of a bankruptcy claim depends on due diligence regarding the validity and likelihood that the claim will be accepted by the bankruptcy trustee, the claim’s seniority and preference amounts, the value and volatility of the underlying assets, asset recovery expenses, and the expected time until the bankruptcy estate is settled.  Appraisal Economics valued the FTX bankruptcy claims for gift and estate tax planning purposes.

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Appraisal Economics has determined the fair market value of a split-dollar receivable in connection with a second-to-die joint life insurance policy. The trustees of the policy entered into a split-dollar agreement with the beneficiary of their life insurance policy. The policy was funded with a single premium payment, and the Split-Dollar Agreement would pay the beneficiary upon the realization of the policy (the “Receivable”). The first step in valuing the Receivable was to determine the appropriate discount rate to use to calculate the present value. Next, we considered the lack of an active trading market for such an instrument. Our concluded value was used for the purpose of the trustee’s gift and estate tax planning.

Appraisal Economics has determined the fair value of an employee stock purchase plan (ESPP), for financial reporting under ASC 718 for a publicly traded real estate investment trust (REIT). The purchase price under the Type B plan was established as a 15 percent discount to the lesser of the stock’s publicly traded price on the grant date and its publicly traded price at the end of the ESPP. The award was economically analogous to a financial instrument known as a “look-back option.” We determined the fair value of the look-back option and, therefore, the ESPP using a synthetic option structure and the Black-Scholes-Merton Model. Our concluded value considered the six-month lock-up that participants were subject to after the end of the ESPP’s term.

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Appraisal Economics has determined the fair market value of restricted blockchain tokens that are not yet publicly traded in connection with Section 83(b) of the Internal Revenue Code. The blockchain technology underpins cryptocurrencies such as Bitcoin and Ether, and the recent surge in popularity has resulted in other entities issuing blockchain-based units, often issued as compensation to employees and advisors. As part of our valuation, we reviewed the firm’s white paper, management’s projections, the restricted token award agreement, and the advisor agreement. Then, we analyzed the failure rates of new companies and rates of return by venture capital investors that invest in early-stage, high-risk investments similar to the tokens to determine the probability-weighted expected payoff to a holder of the tokens and a discount rate to account for the time value of money. Our report was used to facilitate a Section 83(b) election for federal income tax purposes.

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Appraisal Economics has determined the fair value of the property and equipment of a large hospital in California for financial reporting under ASC 805. We determined the fair value of the land by conducting a sales comparison analysis. All comparables were verified by several sources, including brokers, municipal officials, tax searches, and real estate commercial services. Buildings and improvements, furniture, fixtures, and equipment were valued using the cost approach. As part of our analysis, we made adjustments to the values of the subject property and equipment to account for their physical depreciation, functional obsolescence, and economic obsolescence.

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