IAN RATNER, CPA, ABV, ASA, CFE, of GlassRatner Advisory & Capital Group LLC, is a nationally recognized financial advisor, focused in the area of forensic accounting, litigation support, business valuation, and bankruptcy consulting. He has a proven track record as an expert advisor and has led high-profile and complex assignments including failed transactions, SEC investigations, financial reporting frauds, large corporate bankruptcies, and countless commercial litigation matters. In many of these cases, he is asked to decipher contradictory valuation opinions and testimony by getting behind the numbers relied on by others. Ian has testified as an expert on dozens of occasions in state and federal courts in various jurisdictions around the country. GRANT T. STEIN is partner in the law firm of Alston & Bird LLP in the Bankruptcy, Reorganization and Workouts Group. He is a Fellow of the American College of Bankruptcy, Chair and past president of the Southeastern Bankruptcy Law Institute, and is identified as a top practitioner in Chambers USA: America's Leading Lawyers for Business, The Best Lawyers in America, and Super Lawyers magazine. During his more than twenty-five years of practice, he has amassed extensive bankruptcy and litigation experience dealing with valuation questions. JOHN C. WEITNAUER is a partner with the law firm of Alston & Bird LLP in the Bankruptcy, Reorganization and Workouts Group. In 2006, he was co-trial counsel for plaintiffs in a jury trial that involved many business valuation issues, and obtained a verdict stating that over $965,000,000 in transfers were made with the actual intent to defraud the plaintiffs, with $350,000,000 in punitive damages. He has been included in The Best Lawyers in America reference books since 1995. He is profiled in Chambers USA: America's Leading Lawyers for Business. He is a Contributing Editor of two bankruptcy treatises, Norton Bankruptcy Law and Practice and the Bankruptcy Litigation Manual.

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

IAN RATNER, CPA, ABV, ASA, CFE, of GlassRatner Advisory & Capital Group LLC, is a nationally recognized financial advisor, focused in the area of forensic accounting, litigation support, business valuation, and bankruptcy consulting. He has a proven track record as an expert advisor and has led high-profile and complex assignments including failed transactions, SEC investigations, financial reporting frauds, large corporate bankruptcies, and countless commercial litigation matters. In many of these cases, he is asked to decipher contradictory valuation opinions and testimony by getting behind the numbers relied on by others. Ian has testified as an expert on dozens of occasions in state and federal courts in various jurisdictions around the country. GRANT T. STEIN is partner in the law firm of Alston & Bird LLP in the Bankruptcy, Reorganization and Workouts Group. He is a Fellow of the American College of Bankruptcy, Chair and past president of the Southeastern Bankruptcy Law Institute, and is identified as a top practitioner in Chambers USA: America's Leading Lawyers for Business, The Best Lawyers in America, and Super Lawyers magazine. During his more than twenty-five years of practice, he has amassed extensive bankruptcy and litigation experience dealing with valuation questions. JOHN C. WEITNAUER is a partner with the law firm of Alston & Bird LLP in the Bankruptcy, Reorganization and Workouts Group. In 2006, he was co-trial counsel for plaintiffs in a jury trial that involved many business valuation issues, and obtained a verdict stating that over $965,000,000 in transfers were made with the actual intent to defraud the plaintiffs, with $350,000,000 in punitive damages. He has been included in The Best Lawyers in America reference books since 1995. He is profiled in Chambers USA: America's Leading Lawyers for Business. He is a Contributing Editor of two bankruptcy treatises, Norton Bankruptcy Law and Practice and the Bankruptcy Litigation Manual.

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

IAN RATNER, CPA, ABV, ASA, CFE, of GlassRatner Advisory & Capital Group LLC, is a nationally recognized financial advisor, focused in the area of forensic accounting, litigation support, business valuation, and bankruptcy consulting. He has a proven track record as an expert advisor and has led high-profile and complex assignments including failed transactions, SEC investigations, financial reporting frauds, large corporate bankruptcies, and countless commercial litigation matters. In many of these cases, he is asked to decipher contradictory valuation opinions and testimony by getting behind the numbers relied on by others. Ian has testified as an expert on dozens of occasions in state and federal courts in various jurisdictions around the country. GRANT T. STEIN is partner in the law firm of Alston & Bird LLP in the Bankruptcy, Reorganization and Workouts Group. He is a Fellow of the American College of Bankruptcy, Chair and past president of the Southeastern Bankruptcy Law Institute, and is identified as a top practitioner in Chambers USA: America's Leading Lawyers for Business, The Best Lawyers in America, and Super Lawyers magazine. During his more than twenty-five years of practice, he has amassed extensive bankruptcy and litigation experience dealing with valuation questions. JOHN C. WEITNAUER is a partner with the law firm of Alston & Bird LLP in the Bankruptcy, Reorganization and Workouts Group. In 2006, he was co-trial counsel for plaintiffs in a jury trial that involved many business valuation issues, and obtained a verdict stating that over $965,000,000 in transfers were made with the actual intent to defraud the plaintiffs, with $350,000,000 in punitive damages. He has been included in The Best Lawyers in America reference books since 1995. He is profiled in Chambers USA: America's Leading Lawyers for Business. He is a Contributing Editor of two bankruptcy treatises, Norton Bankruptcy Law and Practice and the Bankruptcy Litigation Manual.

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