MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is VALUATION OF CUSTOMER-RELATED ASSETS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

CONSIDER THE ALTERNATE VALUATION DATE The value on an alternate date must include the entire estate and cannot be applied to selected assets owned by an estate. An exception to this rule applies to any assets sold between the date of death and the alternate valuation date. Such assets are valued as of the date of disposal. This rule also makes it clear that two values must be known FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is VALUATION OF CUSTOMER-RELATED ASSETS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

CONSIDER THE ALTERNATE VALUATION DATE The value on an alternate date must include the entire estate and cannot be applied to selected assets owned by an estate. An exception to this rule applies to any assets sold between the date of death and the alternate valuation date. Such assets are valued as of the date of disposal. This rule also makes it clear that two values must be known FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. HOW TO VALUE OIL COMPANIES IN THE BIDEN ERA Like a small boat navigating a big sea, oil & gas valuations are impacted by a plethora of factors that can change almost instantly. Some factors help in arriving at a AN OVERVIEW OF PERSONAL GOODWILL Personal goodwill differs from enterprise goodwill in that personal goodwill represents the value stemming from an individual’s personal service to that business, and is an asset owned by the individual, not the business itself. This value would encompass an individual’s professional reputation, personal relationships with customers or

Q1 2021 M&A UPDATE

An RIA M&A Frenzy. April 12, 2021 Current Events Transactions. Despite the hiatus in M&A beginning with the onset of COVID-19, 2020 was a strong year for RIA mergers and acquisitions, and 2021 is expected to be even stronger. Many of the same forces that have spurred M&A over the last five years drove deal activity in late 2020 and early 2021. OIL AND GAS RESERVE VALUES Oil and Gas Reserve Values. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a GAAP, Non-GAAP, IFRS, and fair market value context. As an example we will consider Exxon Mobil Corp., the nation’s largest energy company, which is under investigation for its lack of asset

write

AUTOMOBILE DEALERSHIP VALUATION 101 Valuation of a business can be a complex process requiring certified business valuation and/or forensic accounting professionals. Valuations of automobile dealerships are unique even from valuation of manufacturing, service, and retail companies. Automobile dealership valuations involve the understanding of industry terminology, factory financial statements, and hybrid valuation approaches. FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. ACQUISITIONS OF CONSOLIDATORS CONTINUE TO DRIVE RIA DEAL Dollar value in 2018 was also boosted by Invesco’s $5 billion purchase of OppenheimerFunds. Acquisitions by (and of) RIA consolidators continue to be a theme for the sector. The largest deal of the second quarter was Goldman Sachs’s $750 million acquisition of RIA consolidator United Capital Partners. The deal is a notable bid

to enter the

THE FAIR MARKET VALUE OF OIL & GAS RESERVES Oil and gas assets represent the majority of value of an E&P company. The Oil and Gas Financial Journal describes reserves as “a measurable value of a company’s worth and a basic measure of its life span.” Thus, understanding the fair market value of a company’s PDP, PDNP, and PUDs is key to understanding the fair market value of the Company. WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is VALUATION OF CUSTOMER-RELATED ASSETS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

CONSIDER THE ALTERNATE VALUATION DATE The value on an alternate date must include the entire estate and cannot be applied to selected assets owned by an estate. An exception to this rule applies to any assets sold between the date of death and the alternate valuation date. Such assets are valued as of the date of disposal. This rule also makes it clear that two values must be known FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is VALUATION OF CUSTOMER-RELATED ASSETS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

CONSIDER THE ALTERNATE VALUATION DATE The value on an alternate date must include the entire estate and cannot be applied to selected assets owned by an estate. An exception to this rule applies to any assets sold between the date of death and the alternate valuation date. Such assets are valued as of the date of disposal. This rule also makes it clear that two values must be known FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. HOW TO VALUE OIL COMPANIES IN THE BIDEN ERA Like a small boat navigating a big sea, oil & gas valuations are impacted by a plethora of factors that can change almost instantly. Some factors help in arriving at a AN OVERVIEW OF PERSONAL GOODWILL Personal goodwill differs from enterprise goodwill in that personal goodwill represents the value stemming from an individual’s personal service to that business, and is an asset owned by the individual, not the business itself. This value would encompass an individual’s professional reputation, personal relationships with customers or

Q1 2021 M&A UPDATE

An RIA M&A Frenzy. April 12, 2021 Current Events Transactions. Despite the hiatus in M&A beginning with the onset of COVID-19, 2020 was a strong year for RIA mergers and acquisitions, and 2021 is expected to be even stronger. Many of the same forces that have spurred M&A over the last five years drove deal activity in late 2020 and early 2021. OIL AND GAS RESERVE VALUES Oil and Gas Reserve Values. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a GAAP, Non-GAAP, IFRS, and fair market value context. As an example we will consider Exxon Mobil Corp., the nation’s largest energy company, which is under investigation for its lack of asset

write

AUTOMOBILE DEALERSHIP VALUATION 101 Valuation of a business can be a complex process requiring certified business valuation and/or forensic accounting professionals. Valuations of automobile dealerships are unique even from valuation of manufacturing, service, and retail companies. Automobile dealership valuations involve the understanding of industry terminology, factory financial statements, and hybrid valuation approaches. FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. ACQUISITIONS OF CONSOLIDATORS CONTINUE TO DRIVE RIA DEAL Dollar value in 2018 was also boosted by Invesco’s $5 billion purchase of OppenheimerFunds. Acquisitions by (and of) RIA consolidators continue to be a theme for the sector. The largest deal of the second quarter was Goldman Sachs’s $750 million acquisition of RIA consolidator United Capital Partners. The deal is a notable bid

to enter the

THE FAIR MARKET VALUE OF OIL & GAS RESERVES Oil and gas assets represent the majority of value of an E&P company. The Oil and Gas Financial Journal describes reserves as “a measurable value of a company’s worth and a basic measure of its life span.” Thus, understanding the fair market value of a company’s PDP, PDNP, and PUDs is key to understanding the fair market value of the Company. WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is VALUATION OF CUSTOMER-RELATED ASSETS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

CONSIDER THE ALTERNATE VALUATION DATE The value on an alternate date must include the entire estate and cannot be applied to selected assets owned by an estate. An exception to this rule applies to any assets sold between the date of death and the alternate valuation date. Such assets are valued as of the date of disposal. This rule also makes it clear that two values must be known FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is VALUATION OF CUSTOMER-RELATED ASSETS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

CONSIDER THE ALTERNATE VALUATION DATE The value on an alternate date must include the entire estate and cannot be applied to selected assets owned by an estate. An exception to this rule applies to any assets sold between the date of death and the alternate valuation date. Such assets are valued as of the date of disposal. This rule also makes it clear that two values must be known FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. HOW TO VALUE OIL COMPANIES IN THE BIDEN ERA Like a small boat navigating a big sea, oil & gas valuations are impacted by a plethora of factors that can change almost instantly. Some factors help in arriving at a AN OVERVIEW OF PERSONAL GOODWILL Personal goodwill differs from enterprise goodwill in that personal goodwill represents the value stemming from an individual’s personal service to that business, and is an asset owned by the individual, not the business itself. This value would encompass an individual’s professional reputation, personal relationships with customers or

Q1 2021 M&A UPDATE

An RIA M&A Frenzy. April 12, 2021 Current Events Transactions. Despite the hiatus in M&A beginning with the onset of COVID-19, 2020 was a strong year for RIA mergers and acquisitions, and 2021 is expected to be even stronger. Many of the same forces that have spurred M&A over the last five years drove deal activity in late 2020 and early 2021. OIL AND GAS RESERVE VALUES Oil and Gas Reserve Values. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a GAAP, Non-GAAP, IFRS, and fair market value context. As an example we will consider Exxon Mobil Corp., the nation’s largest energy company, which is under investigation for its lack of asset

write

AUTOMOBILE DEALERSHIP VALUATION 101 Valuation of a business can be a complex process requiring certified business valuation and/or forensic accounting professionals. Valuations of automobile dealerships are unique even from valuation of manufacturing, service, and retail companies. Automobile dealership valuations involve the understanding of industry terminology, factory financial statements, and hybrid valuation approaches. FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. ACQUISITIONS OF CONSOLIDATORS CONTINUE TO DRIVE RIA DEAL Dollar value in 2018 was also boosted by Invesco’s $5 billion purchase of OppenheimerFunds. Acquisitions by (and of) RIA consolidators continue to be a theme for the sector. The largest deal of the second quarter was Goldman Sachs’s $750 million acquisition of RIA consolidator United Capital Partners. The deal is a notable bid

to enter the

THE FAIR MARKET VALUE OF OIL & GAS RESERVES Oil and gas assets represent the majority of value of an E&P company. The Oil and Gas Financial Journal describes reserves as “a measurable value of a company’s worth and a basic measure of its life span.” Thus, understanding the fair market value of a company’s PDP, PDNP, and PUDs is key to understanding the fair market value of the Company. WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest OIL AND GAS RESERVE VALUES Oil and Gas Reserve Values. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a GAAP, Non-GAAP, IFRS, and fair market value context. As an example we will consider Exxon Mobil Corp., the nation’s largest energy company, which is under investigation for its lack of asset

write

ESPORTS: BUSINESS MODELS AUTOMOBILE DEALERSHIP VALUATION 101 NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to VALUATION OF CUSTOMER-RELATED ASSETS FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest OIL AND GAS RESERVE VALUES Oil and Gas Reserve Values. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a GAAP, Non-GAAP, IFRS, and fair market value context. As an example we will consider Exxon Mobil Corp., the nation’s largest energy company, which is under investigation for its lack of asset

write

ESPORTS: BUSINESS MODELS AUTOMOBILE DEALERSHIP VALUATION 101 NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to VALUATION OF CUSTOMER-RELATED ASSETS FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

FAIRNESS OPINIONS

Evaluating a Buyer’s Shares From the Seller’s Perspective. M&A activity in North America (and globally) is rebounding in 2021 after falling to less than $2.0 trillion of deal value in 2020 for just the second time since 2015 according to PitchBook; however, deal activity has accelerated in 2021 and is expected to easily top 2020 assuming no major market disruption due to a confluence of SUCCESSION PLANNING FOR INDEPENDENT RIAS Succession planning has been an area of increasing focus in the RIA industry, particularly given what many are calling a looming succession crisis.The demographics suggest that increased attention to succession planning is well warranted: over 60% of RIAs are still led by their founders, and only about a quarter of them have non-founding

shareholders.

TAX PLANNING FOR AUTO DEALERSHIPS In business valuation, appraisers seek to normalize historical earnings to establish the level of earnings an investor might reasonably expect from an investment in the subject company. VALUATION AND M&A TRENDS IN THE AUTO DEALER INDUSTRY A few weeks ago, I sat down with Kevin Nill of Haig Partners to discuss trends in the auto dealer industry and the release of their Fourth Quarter 2020 Haig Report.Specifically, I wanted to focus on the unique conditions impacting the industry, and also the changing methodology that buyers are utilizing to assess dealership values. AN INTRODUCTION TO DIVIDENDS AND DIVIDEND POLICY FOR An Introduction to Dividends and Dividend Policy for Private Companies. Excerpted from Z. Christopher Mercer, FASA, CFA, ABAR,’s newest book, Unlocking Private Company Wealth. It is reprinted here with permission. The issue of dividends and dividend policy is of great significance to owners of closely held and family businesses and

deserves

FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets. HOW TO VALUE YOUR INSURANCE BROKERAGE A lack of knowledge regarding the value of your business could be costly, leading to missed opportunities or inadequate wealth planning. On a practical level, understanding how insurance agencies and brokerages are actually valued may help you understand how to increase the value of your business and maximize your return when it comes time

to

CRYPTO, MEME STOCKS, NFTS AND YOUR FAMILY BUSINESS Italian artist Salvatore Garau made headlines last week with the reported sale of his invisible sculpture at an auction. It is probably not our place to wade into heady debates surrounding the ontology of art, but the reported winning bid of $18,000 is admittedly hard to evaluate relative to something which, in at least a material sense,

does not exist.

AN OVERVIEW OF SALT WATER DISPOSAL An Overview of Salt Water Disposal. Over the last 12 years the oilfield waste water disposal industry has grown exponentially, both on an absolute basis, and by rank of its importance/size among the oilfield services. This growth has been largely driven by the increased volumes of waste water generated in the production of oil

from shale plays.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest OIL AND GAS RESERVE VALUES Oil and Gas Reserve Values. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a GAAP, Non-GAAP, IFRS, and fair market value context. As an example we will consider Exxon Mobil Corp., the nation’s largest energy company, which is under investigation for its lack of asset

write

ESPORTS: BUSINESS MODELS THE VALUATION OF ASSET MANAGEMENT FIRMS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest OIL AND GAS RESERVE VALUES Oil and Gas Reserve Values. This is the first of two posts in which we will investigate the different values placed on oil and gas reserves in a GAAP, Non-GAAP, IFRS, and fair market value context. As an example we will consider Exxon Mobil Corp., the nation’s largest energy company, which is under investigation for its lack of asset

write

ESPORTS: BUSINESS MODELS THE VALUATION OF ASSET MANAGEMENT FIRMS HOW TO VALUE AN OIL AND GAS REFINERY NORMALIZING ADJUSTMENTS TO THE INCOME STATEMENT Normalizing adjustments adjust the income statement of a private company to show the prospective purchaser the return from normal operations of the business and reveal a “public equivalent” income stream. If such adjustments were not made, something other than a freely traded value indication of value would be developed by

capitalizing the

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets.

FAIRNESS OPINIONS

Evaluating a Buyer’s Shares From the Seller’s Perspective. M&A activity in North America (and globally) is rebounding in 2021 after falling to less than $2.0 trillion of deal value in 2020 for just the second time since 2015 according to PitchBook; however, deal activity has accelerated in 2021 and is expected to easily top 2020 assuming no major market disruption due to a confluence of TAX PLANNING FOR AUTO DEALERSHIPS In business valuation, appraisers seek to normalize historical earnings to establish the level of earnings an investor might reasonably expect from an investment in the subject company. SUCCESSION PLANNING FOR INDEPENDENT RIAS Succession planning has been an area of increasing focus in the RIA industry, particularly given what many are calling a looming succession crisis.The demographics suggest that increased attention to succession planning is well warranted: over 60% of RIAs are still led by their founders, and only about a quarter of them have non-founding

shareholders.

AUTOMOBILE DEALERSHIP VALUATION 101 Valuation of a business can be a complex process requiring certified business valuation and/or forensic accounting professionals. Valuations of automobile dealerships are unique even from valuation of manufacturing, service, and retail companies. Automobile dealership valuations involve the understanding of industry terminology, factory financial statements, and hybrid valuation approaches. AN INTRODUCTION TO DIVIDENDS AND DIVIDEND POLICY FOR An Introduction to Dividends and Dividend Policy for Private Companies. Excerpted from Z. Christopher Mercer, FASA, CFA, ABAR,’s newest book, Unlocking Private Company Wealth. It is reprinted here with permission. The issue of dividends and dividend policy is of great significance to owners of closely held and family businesses and

deserves

UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is CRYPTO, MEME STOCKS, NFTS AND YOUR FAMILY BUSINESS Italian artist Salvatore Garau made headlines last week with the reported sale of his invisible sculpture at an auction. It is probably not our place to wade into heady debates surrounding the ontology of art, but the reported winning bid of $18,000 is admittedly hard to evaluate relative to something which, in at least a material sense,

does not exist.

HOW TO VALUE AN OIL AND GAS REFINERY The price of refined products. There are four main components to refined product prices: (1) Crude Oil Prices, (2) Wholesale Margins, (3) Retail Distribution Costs, and (4) Taxes. Generally, input prices and wholesale margins drive fluctuations in product prices as the last two are relatively stable. THE FAIR MARKET VALUE OF OIL & GAS RESERVES Oil and gas assets represent the majority of value of an E&P company. The Oil and Gas Financial Journal describes reserves as “a measurable value of a company’s worth and a basic measure of its life span.” Thus, understanding the fair market value of a company’s PDP, PDNP, and PUDs is key to understanding the fair market value of the Company. FAMILY LIMITED PARTNERSHIPS: ARE ASSIGNEE INTERESTS WORTH Since family limited partnerships (or FLPs) became popular in 1994, we have valued hundreds such asset holding entities. Family limited partnerships are useful because one generation, owning a general partnership interest, can control the cash flow from gifted assets.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest

MARCH 2021 SAAR

We will instead try to show both a comparison to 2020 and 2019 levels. Even with this adjustment, March SAAR for 2021 was an increase of 44% compared to 2019. Driving March SAAR were sales of light trucks which accounted for 78.1% of all new vehicle sales in March 2021. This metric is a slight uptick from the 74% they accounted for in March

2020.

AUTOMOBILE DEALERSHIP VALUATION 101 UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is HOW TO VALUE A WEALTH MANAGEMENT FIRM About Mercer Capital Mercer Capital provides RIAs, independent trust companies, and alternative asset managers with business valuation and financial advisory services related to WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall. UNDERSTAND THE VALUE OF YOUR AGRICULTURAL EQUIPMENT AND The purpose of this whitepaper is to provide an informative overview regarding the valuation of agricultural equipment and machinery dealerships. A lack of knowledge regarding the value of your business could be very costly. Opportunities for successful liquidity events may be missed or estate planning could be incorrectly implemented

based on

RECENT TRENDS IN AGRICULTURAL PRODUCTION LENDING

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest

MARCH 2021 SAAR

We will instead try to show both a comparison to 2020 and 2019 levels. Even with this adjustment, March SAAR for 2021 was an increase of 44% compared to 2019. Driving March SAAR were sales of light trucks which accounted for 78.1% of all new vehicle sales in March 2021. This metric is a slight uptick from the 74% they accounted for in March

2020.

AUTOMOBILE DEALERSHIP VALUATION 101 UNDERSTAND THE DISCOUNT RATE USED IN A BUSINESS VALUATION An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is HOW TO VALUE A WEALTH MANAGEMENT FIRM About Mercer Capital Mercer Capital provides RIAs, independent trust companies, and alternative asset managers with business valuation and financial advisory services related to WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall. UNDERSTAND THE VALUE OF YOUR AGRICULTURAL EQUIPMENT AND The purpose of this whitepaper is to provide an informative overview regarding the valuation of agricultural equipment and machinery dealerships. A lack of knowledge regarding the value of your business could be very costly. Opportunities for successful liquidity events may be missed or estate planning could be incorrectly implemented

based on

RECENT TRENDS IN AGRICULTURAL PRODUCTION LENDING RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however.

DECEMBER 2020 SAAR

In December 2020, monthly retail sales appear to have actually improved 0.5% from 2019, compared to a 33% decline in fleet volumes. Viewed another way, fleet sales represented only about 14.3% of total volumes in 2020, compared to a 19.6% share in 2019. We touched on the impact of retail vs total SAAR last month. ESPORTS: BUSINESS MODELS Chris Mercer, founder of Mercer Capital, states the two primary factors in the value of a business are risk and growth. eSports teams with a significant amount of recurring revenue (through sponsorships, subscriptions, etc.) are less risky than teams that have less consistent revenue sources (prize money, merchandise sales). TAX PLANNING FOR AUTO DEALERSHIPS In business valuation, appraisers seek to normalize historical earnings to establish the level of earnings an investor might reasonably expect from an investment in the subject company. SUCCESSION PLANNING FOR INDEPENDENT RIAS Succession planning has been an area of increasing focus in the RIA industry, particularly given what many are calling a looming succession crisis.The demographics suggest that increased attention to succession planning is well warranted: over 60% of RIAs are still led by their founders, and only about a quarter of them have non-founding

shareholders.

MINERAL AND ROYALTY VALUATIONS REMAIN LOW AMID RECENT OIL Mineral And Royalty Valuations Remain Low Amid Recent Oil Price Gains. February 5, 2021 Mineral and Royalty Rights Valuation Issues. The recent rise of oil prices returning to over $50 per barrel is a welcome sign to mineral and royalty holders across the board. There are inklings of bullish expectations for oil and gas prices in the

coming year.

FAIRNESS OPINIONS

Evaluating a Buyer’s Shares From the Seller’s Perspective. M&A activity in North America (and globally) is rebounding in 2021 after falling to less than $2.0 trillion of deal value in 2020 for just the second time since 2015 according to PitchBook; however, deal activity has accelerated in 2021 and is expected to easily top 2020 assuming no major market disruption due to a confluence of COMMUNITY BANK VALUATION (PART 1) At Mercer Capital, valuations of clients’ securities are more than a mere quantitative exercise. Integrating a bank’s growth prospects and risk characteristics into a valuation analysis requires understanding the bank’s history, business plans, market opportunities, response to emerging technological issues, staff experience, and the like. CRYPTO, MEME STOCKS, NFTS AND YOUR FAMILY BUSINESS Italian artist Salvatore Garau made headlines last week with the reported sale of his invisible sculpture at an auction. It is probably not our place to wade into heady debates surrounding the ontology of art, but the reported winning bid of $18,000 is admittedly hard to evaluate relative to something which, in at least a material sense,

does not exist.

MINERAL AGGREGATOR VALUATION MULTIPLES MERCER CAPITAL Mineral Aggregator Valuation Multiples www.mercercapital.com www.mercercapital.com With Market Data as of May

26, 2021

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. AUTOMOBILE DEALERSHIP VALUATION 101

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest PRIVATE INITIAL OFFERINGS

J. DAVID SMITH

Senior Vice President. 📞 (832) 432-1011. smithd@mercercapital.com. 🔗 LinkedIn Profile. PDF ⬇ Download J. David Smith's CV. David Smith, Senior Vice President, has over 20 years of business valuation experience and has been involved with hundreds of valuation and related engagements. He values businesses, business interests, and FAMILY LIMITED PARTNERSHIPS Family limited partnerships have become an increasingly popular estate planning tool. The partnership structure allows the donor to consolidate a portion of his or her assets into a single portfolio, manage the assets in an orderly fashion, and gift interests in the portfolio as whole (rather than gift individual assets on a piecemeal

basis).

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to UNDERSTAND THE VALUE OF YOUR AGRICULTURAL EQUIPMENT AND The purpose of this whitepaper is to provide an informative overview regarding the valuation of agricultural equipment and machinery dealerships. A lack of knowledge regarding the value of your business could be very costly. Opportunities for successful liquidity events may be missed or estate planning could be incorrectly implemented

based on

WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. AUTOMOBILE DEALERSHIP VALUATION 101

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest PRIVATE INITIAL OFFERINGS

J. DAVID SMITH

Senior Vice President. 📞 (832) 432-1011. smithd@mercercapital.com. 🔗 LinkedIn Profile. PDF ⬇ Download J. David Smith's CV. David Smith, Senior Vice President, has over 20 years of business valuation experience and has been involved with hundreds of valuation and related engagements. He values businesses, business interests, and FAMILY LIMITED PARTNERSHIPS Family limited partnerships have become an increasingly popular estate planning tool. The partnership structure allows the donor to consolidate a portion of his or her assets into a single portfolio, manage the assets in an orderly fashion, and gift interests in the portfolio as whole (rather than gift individual assets on a piecemeal

basis).

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to UNDERSTAND THE VALUE OF YOUR AGRICULTURAL EQUIPMENT AND The purpose of this whitepaper is to provide an informative overview regarding the valuation of agricultural equipment and machinery dealerships. A lack of knowledge regarding the value of your business could be very costly. Opportunities for successful liquidity events may be missed or estate planning could be incorrectly implemented

based on

WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. SUCCESSION PLANNING FOR INDEPENDENT RIAS Succession planning has been an area of increasing focus in the RIA industry, particularly given what many are calling a looming succession crisis.The demographics suggest that increased attention to succession planning is well warranted: over 60% of RIAs are still led by their founders, and only about a quarter of them have non-founding

shareholders.

THE VALUATION OF ASSET MANAGEMENT FIRMS So if most asset managers are priced at, say, 10x earnings and profit margins are 40%, the resulting valuation multiple of revenue is 4.0x. If revenue is generated by average fees of 50 basis points of assets under management, then the implied valuation is about 2% of AUM. Note, however, all the “ifs” required to make the 2% of AUM rule of

FAIRNESS OPINIONS

Evaluating a Buyer’s Shares From the Seller’s Perspective. M&A activity in North America (and globally) is rebounding in 2021 after falling to less than $2.0 trillion of deal value in 2020 for just the second time since 2015 according to PitchBook; however, deal activity has accelerated in 2021 and is expected to easily top 2020 assuming no major market disruption due to a confluence of TAX PLANNING FOR AUTO DEALERSHIPS In business valuation, appraisers seek to normalize historical earnings to establish the level of earnings an investor might reasonably expect from an investment in the subject company. MINERAL AND ROYALTY VALUATIONS REMAIN LOW AMID RECENT OIL Mineral And Royalty Valuations Remain Low Amid Recent Oil Price Gains. February 5, 2021 Mineral and Royalty Rights Valuation Issues. The recent rise of oil prices returning to over $50 per barrel is a welcome sign to mineral and royalty holders across the board. There are inklings of bullish expectations for oil and gas prices in the

coming year.

WHAT SHOULD YOU EXPECT AS AN RIA BUYER OR SELLER? RIA M&A has been a well-publicized topic in the industry. There was a record level of RIA M&A in 2018, and so far in 2019 there are no signs that deal pace is slowing down.. Against this backdrop, a new study conducted by Advisor Growth Strategies (AGS) and sponsored by BlackRock sheds light on the realities facing RIA buyers and sellers. HOW TO VALUE YOUR INSURANCE BROKERAGE A lack of knowledge regarding the value of your business could be costly, leading to missed opportunities or inadequate wealth planning. On a practical level, understanding how insurance agencies and brokerages are actually valued may help you understand how to increase the value of your business and maximize your return when it comes time

to

MINERAL AGGREGATOR VALUATION MULTIPLES MERCER CAPITAL Mineral Aggregator Valuation Multiples www.mercercapital.com www.mercercapital.com With Market Data as of May

26, 2021

VALUE FOCUS EXPLORATION & PRODUCTION BUSINESS VALUATION & FINANCIAL ADVISORY SERVICES VALUE FOCUS Exploration & Production First Quarter 2021 // Region Focus: Eagle Ford EXECUTIVE SUMMARY

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. AUTOMOBILE DEALERSHIP VALUATION 101

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest PRIVATE INITIAL OFFERINGS

J. DAVID SMITH

Senior Vice President. 📞 (832) 432-1011. smithd@mercercapital.com. 🔗 LinkedIn Profile. PDF ⬇ Download J. David Smith's CV. David Smith, Senior Vice President, has over 20 years of business valuation experience and has been involved with hundreds of valuation and related engagements. He values businesses, business interests, and FAMILY LIMITED PARTNERSHIPS Family limited partnerships have become an increasingly popular estate planning tool. The partnership structure allows the donor to consolidate a portion of his or her assets into a single portfolio, manage the assets in an orderly fashion, and gift interests in the portfolio as whole (rather than gift individual assets on a piecemeal

basis).

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to UNDERSTAND THE VALUE OF YOUR AGRICULTURAL EQUIPMENT AND The purpose of this whitepaper is to provide an informative overview regarding the valuation of agricultural equipment and machinery dealerships. A lack of knowledge regarding the value of your business could be very costly. Opportunities for successful liquidity events may be missed or estate planning could be incorrectly implemented

based on

WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall.

MERCER CAPITAL

Mercer Capital's RIA Valuation Insights blog is a weekly update on issues important to the Investment Management industry. On May 7, 2020, Neiman Marcus, an iconic luxury retailer, announced in its bankruptcy filing plans to reorganize under Chapter 11 with the backing of most creditors. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. AUTOMOBILE DEALERSHIP VALUATION 101

APRIL 2021 SAAR

April 2021 SAAR. May 10, 2021 SAAR. SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million . This is a 3.1% increase from March 2021. As we have mentioned in our previous SAAR blog post, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest PRIVATE INITIAL OFFERINGS

J. DAVID SMITH

Senior Vice President. 📞 (832) 432-1011. smithd@mercercapital.com. 🔗 LinkedIn Profile. PDF ⬇ Download J. David Smith's CV. David Smith, Senior Vice President, has over 20 years of business valuation experience and has been involved with hundreds of valuation and related engagements. He values businesses, business interests, and FAMILY LIMITED PARTNERSHIPS Family limited partnerships have become an increasingly popular estate planning tool. The partnership structure allows the donor to consolidate a portion of his or her assets into a single portfolio, manage the assets in an orderly fashion, and gift interests in the portfolio as whole (rather than gift individual assets on a piecemeal

basis).

LANDS’ END AND TRADE NAME IMPAIRMENT Lands’ End and Trade Name Impairment. February 1, 2016. Last week, Lands’ End, Inc. (NASDAQ: LE) announced that it would write down the value of its flagship trade name asset (Lands’ End). Management’s preliminary guidance is for a charge of $90 million to $110 million, which could lower the asset’s value by 20% from $528 million to UNDERSTAND THE VALUE OF YOUR AGRICULTURAL EQUIPMENT AND The purpose of this whitepaper is to provide an informative overview regarding the valuation of agricultural equipment and machinery dealerships. A lack of knowledge regarding the value of your business could be very costly. Opportunities for successful liquidity events may be missed or estate planning could be incorrectly implemented

based on

WHAT IS THE ORDER OF TESTING FOR IMPAIRMENT? What is the Order of Testing for Impairment? When testing the goodwill of a reporting unit for impairment, the order of operations matters. Because the units themselves may contain assets subject to impairment testing, it is important to first reflect accurate carrying values for those assets before testing the goodwill of the unit overall. RIA VALUATION INSIGHTS The outlook for RIAs depends on a number of factors. Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents. The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. SUCCESSION PLANNING FOR INDEPENDENT RIAS Succession planning has been an area of increasing focus in the RIA industry, particularly given what many are calling a looming succession crisis.The demographics suggest that increased attention to succession planning is well warranted: over 60% of RIAs are still led by their founders, and only about a quarter of them have non-founding

shareholders.

THE VALUATION OF ASSET MANAGEMENT FIRMS So if most asset managers are priced at, say, 10x earnings and profit margins are 40%, the resulting valuation multiple of revenue is 4.0x. If revenue is generated by average fees of 50 basis points of assets under management, then the implied valuation is about 2% of AUM. Note, however, all the “ifs” required to make the 2% of AUM rule of

FAIRNESS OPINIONS

Evaluating a Buyer’s Shares From the Seller’s Perspective. M&A activity in North America (and globally) is rebounding in 2021 after falling to less than $2.0 trillion of deal value in 2020 for just the second time since 2015 according to PitchBook; however, deal activity has accelerated in 2021 and is expected to easily top 2020 assuming no major market disruption due to a confluence of TAX PLANNING FOR AUTO DEALERSHIPS In business valuation, appraisers seek to normalize historical earnings to establish the level of earnings an investor might reasonably expect from an investment in the subject company. MINERAL AND ROYALTY VALUATIONS REMAIN LOW AMID RECENT OIL Mineral And Royalty Valuations Remain Low Amid Recent Oil Price Gains. February 5, 2021 Mineral and Royalty Rights Valuation Issues. The recent rise of oil prices returning to over $50 per barrel is a welcome sign to mineral and royalty holders across the board. There are inklings of bullish expectations for oil and gas prices in the

coming year.

WHAT SHOULD YOU EXPECT AS AN RIA BUYER OR SELLER? RIA M&A has been a well-publicized topic in the industry. There was a record level of RIA M&A in 2018, and so far in 2019 there are no signs that deal pace is slowing down.. Against this backdrop, a new study conducted by Advisor Growth Strategies (AGS) and sponsored by BlackRock sheds light on the realities facing RIA buyers and sellers. HOW TO VALUE YOUR INSURANCE BROKERAGE A lack of knowledge regarding the value of your business could be costly, leading to missed opportunities or inadequate wealth planning. On a practical level, understanding how insurance agencies and brokerages are actually valued may help you understand how to increase the value of your business and maximize your return when it comes time

to

MINERAL AGGREGATOR VALUATION MULTIPLES MERCER CAPITAL Mineral Aggregator Valuation Multiples www.mercercapital.com www.mercercapital.com With Market Data as of May

26, 2021

VALUE FOCUS EXPLORATION & PRODUCTION BUSINESS VALUATION & FINANCIAL ADVISORY SERVICES VALUE FOCUS Exploration & Production First Quarter 2021 // Region Focus: Eagle Ford EXECUTIVE SUMMARY

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NEW BENCHMARKING GUIDE THE 2019 BENCHMARKING GUIDE FOR FAMILY BUSINESS DIRECTORS Family business directors need the best information available when making strategic financial decisions that will help set the course of their business for years to come. This _Benchmarking Guide_ is the resource directors need. Going beyond the basics of revenue growth, profit margins, and balance sheet composition data, this _Benchmarking Guide_ equips family business directors with the information needed to make informed decisions regarding capital budgeting, capital structure, and dividend

policy.

Market data is transformed into meaningful information in this _Benchmarking Guide_ for family business directors and their advisors. Also provided are questions and insights to help guide directors in their deliberations on these important decisions.

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Energy Valuation Insights Mercer Capital's Energy Valuation Insights blog is a weekly update on issues important to the Energy industry.

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Family Business Director Mercer Capital's Family Business Director blog provides corporate finance and planning insights to multi-generational family businesses

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Auto Dealer Industry Newsletter Each issue of this industry newsletter typically includes a market overview, mergers and acquisitions review, guideline public company

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Equity Compensation: 2019 Financial Reporting Update Featuring five articles, this issue of Mercer Capital’s financial reporting update focuses on the topic of equity compensation.

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How to Value a Wealth Management Firm Because valuation is a relative concept (one asset is only “worth” something when compared to the worth of other assets), the value of a wealth management firm is very much about context. The particular transactional purpose of a valuation is a context. The firm being valued is a context. The state of the wealth management industry is a context. Each context provides a perspective on the expected returns of an investment in a wealth management firm. This whitepaper is intended to give a brief overview of relevant considerations of these perspectives on the value of wealth management

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RECENT NEWS

September 26, 2019 Mercer Capital Provides Advisory Services to FNB

Financial Corp.

Mercer Capital served as a financial advisor and rendered a financial opinion to Scottsville, Kentucky-based FNB Financial Corp., which announced on September 18, 2019 that it had entered into a definitive merger agreement to be acquired by Nashville, Tennessee-based FB Financial Corporation (NYSE: FBK). The transaction is expected to close during the first quarter of 2020. September 25, 2019 Matt Crow to Speak at the 2019 IAA Leadership

Conference

September 25, 2019 Bryce Erickson to Speak at the 2019 DUG Eagle Ford

Conference

September 10, 2019 Mercer Capital to Exhibit and Attend the 2019

Insider’s Forum

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