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welcome to this installment of conversation with the Masters i am brian jones this installment will feature a conversation with Michael Kaplan Michael Kaplan has more than 35 years of experience in financial forensics and business valuation he is a CPA abv CVA and see FFA and also a partner in Kaplan Abraham Burgert valuation and litigation consulting he’s been rendered as an expert in more than 250 matters involving employment disputes matrimonial litigation shareholder disputes and other litigation matters he is the president of the financial forensics Institute and the lead architect for the training and certification programs leading towards the certified forensic financial analyst cfa designation please enjoy this conversation with Michael Kaplan well first of all Brian I’ve been a CPA for many years and many of the members of NAC VA and many of the business valuation practitioners certainly at backgrounds of CPAs I had been practicing primarily in the litigation arena for a number of years and I realized that it was time for me to pursue additional education in the area of business valuation I was a partner in a very substantial firm at that time of my partners and I agreed that I would be the one to pursue the education and procure a credential and business valuation about that time the NAC VA brochure crossed my desk and I looked at it the program looked very attractive very interesting and when was this this was in 1995 the program was in Chicago I traveled to Chicago went through the educational program and when I completed the program i contacted parnell black the CEO of NAC VA and I shared with him some thoughts that i had about some of the programs that i was able to teach that i thought would work well within the business valuation training center I had spent many years as a university professor 18 years on the faculty of the University of Southern California which is my alma mater and I was able to take much of what I learned at the university level and incorporate it into the continuing education realm through the business valuation training center I taught the litigation day for about eight years during that time a number of the attendees of the program approached me and they said we want more in-depth more extensive education in litigation so I brought a proposal to the organization that we expand the litigation piece and have a two-day litigation workshop well no sooner did we implement the two-day litigation workshop then students approach me and say you know we’d really like a five-day bootcamp and that was the beginning of the educational program that five-day boot camp which is what led to the creation of the financial forensics Institute and the various programs that are offered that lead to the cff a certified forensic financial analyst credential right since then we’ve presented many many programs and litigation each year we’re always updating the programs cranking them up a notch we’re always adding new programs on there we now have five tracks leading to the cff a credential we have the financial litigation track the forensic accounting track the fraud track the matrimonial litigation track the business and intellectual property damages track and we will soon be introducing the bankruptcy and insolvency track as well as the business valuation and litigation track so the litigation based programs have really expanded I’ve enjoyed them I’ve enjoyed seeing a lot of the younger people the up-and-comers really evolved through the profession really step up to the plate and add so much to the equation one of the things that I learned early in my career is that if you are going to hold yourself out as a business valuation practitioner you are going to be drawn into litigation so much of business valuation is for the purpose of resolving legal disputes in matrimonial settings where there’s a business that’s owned by one of the spouses it’s something that needs to be valued and the valuation expert

has to participate in the resolution process either in settlement discussions or take the witness stand in the courtroom and give expert testimony in a situation where their shareholder disputes and there’s one shareholder buying out another shareholder or the corporation buying out a shareholder their evaluation issues so the valuation practice just lends itself really well to being aligned with the litigation practice you can’t do valuation without being drawn into the litigation world what are some opportunities for for newly credentialed members to to take that fundamental valuation training and then branch into a specialty area there are many opportunities again it it emanates out of what a practitioner is going to be drawn into when they practice in business valuation there’s so many areas that business valuation relates to it in business valuation for example typically there there’s a need for investigative forensic techniques to be applied so that the valuation expert can have a comfort level that the financial data the company’s books and records and all the evidence that he or she is considering is evidence that can be relied upon so that opens the door into the forensic and investigative arena I already explained that business valuation practitioners are going to be drawn into into litigation just by virtue of the fact that they’re there in valuation evaluation practitioners can apply and often apply many of the same techniques the same tools that they use to to formulate an opinion with the value of a business those same tools can be applied to measure damages to measure the loss of an earnings stream to measure the impact on an infringement of a patent or copyright or trademark so many of the same tools and same approaches apply and if you look at the case law if you look at the statutes the code sections they’re very well-defined and you know they give additional authority for valuation experts to be able to apply these tools in those areas so business valuation is where it starts and it just opens so many doors the matrimonial arena an individual whose practices in business valuation will find themselves valuing a business to divide up a marital estate to help resolve the division of property in a marital estate but that marital estate also has income issues and it has tracing issues to determine as the property his it hers is it theirs and that same practitioner who that same professional who values the business is called upon to perform the other professional services fundamental training it definitely lays the foundation for for the other support work within the consulting around litigation where it can and it does on a regular basis on and on a daily basis I have been on site with you i would say hundreds of times over the past 13 years that i’ve been with the organization and I’ve watched you mentoring students and instructors and coaching them I’m passionate about everything that I do I believe that if you can’t be passionate about something don’t even approach it I enjoy what I do I love the world of teaching I love the world of Education I enjoy litigation I enjoy the dynamics of litigation I don’t enjoy the monotony of accounting and things that types of practices that are often associated with ce pas but i really enjoy the more exciting areas I enjoy watching people grow up in the field I enjoy Ching younger members of the profession gain skills gained more confidence gained better style to enable them to be professionals I believe that when i get up in front of a class when i teach a program a day a conference an hour whatever the case may be that if i can’t give the attendee give the student give the professional something that he or she can take away and use productively in their practice i haven’t done my job that job begins with the program that i teach it doesn’t end at the end of the day it doesn’t end at the end of the week I know that you’ve seen the final days and final moments of many of the programs that i presented i typically end with giving each of the attendees my phone number my cell phone number if you’ve got a problem if you’ve got a case if you’re involved in a challenging situation please phone me bounce it off of me i’ll give you my perspectives it doesn’t end when the program ends that’s

when the mentoring begins there’s been a lot of growth in the industry over the past 20 years na SI VA will celebrate its 20th anniversary actually starting this year 2011 but since you’ve been involved what do you see currently as some of the challenges that analysts are facing and how would you advise people to address them and deal with with what’s going on in our economy and our industry and the growth of the profession let me address the industry first one of the things that we’ve seen happen over the past five to ten years is that there’s a recognition as the importance of the business valuation arena and the financial forensics arena there are many practitioners jumping into business valuation and jumping into financial forensics jumping into litigation that just don’t have the education they don’t have the training they don’t have the experience because they’re CPAs and the holder shingles out and they they represent themselves as being able to do this work it often becomes difficult for the public to distinguish between those people who are the true professionals with state-of-the-art up-to-date tools techniques and perspectives from those who are newcomers into the industry the the advice that I would give to practitioners in our field particularly in today’s environment in today’s economy number one get the education get the certifications stay up-to-date pursue all of the current updates and have mentors have people who you can bring in who you can call upon who can bounce ideas off of so that you as a professional can deliver to your client your client in the legal profession to your client in industry the best and latest and state-of-the-art in terms of professional valuation services that will enable them to rely upon your work and make the right decisions I also want to add that it’s very important that anyone in this field particularly in today’s economy practice to the highest level of professional standards there are more businesses in our challenging economy that are failing there are businesses that are having financial difficulties and having challenges and that often look back at their professionals and ask themselves did this professional did these professionals give me the best advice right and if the professional practice at a level that doesn’t meet the standard of care if the professional didn’t provide state-of-the-art the best advice the most up to date approaches there’s a lot of exposure a lot of liability that the professional has so we we just have to reconfirm our commitment to practicing at the highest level it’s critical another critical factor is that in this economy many businesses are facing cashflow problems we as professionals can advise our clients as to how to navigate through the cash flow turbulent waters but one thing we don’t want to do is adopt and embrace our clients cash flow problems as our own which means we have to manage our practices more carefully we have to control our fee arrangements more carefully we have to make sure that the bills are up to date that that our clients are keeping up to date so that they know that we are lead and important professionals to them and that we know that these are clients that that we need to serve and be responsive to when the fee arrangement gets out of balance when the management of a client’s receivable gets out of balance it’s very easy for that professional and client relationship to deteriorate and particularly when we in the valuation arena are dealing with people in the legal community the deterioration of the relationship can have some far-reaching consequences and I’ve seen that happen with the number of professionals who weren’t just weren’t careful you thought a lot about the expert and the attorneys relationship in your in your training courses how the expert can really help obviously in the litigation environment the attorneys succeed with their clients why is that relationship critical and what are some of the maybe two or three ideas or recommendations you would give to analysts that can help them with their attorney clients be successful in

an engagement first thing and foremost is that valuation professionals litigation professionals financial forensics professionals have to have open communication with their referring attorneys it’s important that our referring attorneys understand what we do understand what we bring to the table understand the scope of the services that we can perform an attorney will take on a case and begin the proceeding of that case have an idea as to what the expert can do when often the expert can do so much more it’s also very important that in the context of dispute resolution that the expert that the financial expert understand that is his or her expertise his or her own unbiased opinions that will make the difference and that when the expert begins to adopt the biases of the attorney or the biases of the litigant of the client that the the quality of the opinion begins to deteriorate and that if an expert delivers anything other than a purely objective unbiased opinion that that’s going to be subject to challenge and it will not be in the best in the clients best interest a valuation professional really has to tell it like it is and when the professional has something to tell the attorney that the attorney is not going to like or that the client is not going to like valuation professional has to say it first thing the expert has to communicate to the attorney is that the expert will build his or her opinion on the evidence not upon the attorneys spin on the evidence or the litigants spin on the evidence the client spent on the evidence often it’s a good idea for the attorney and the expert to have an understanding that the expert is going to have little or no contact with the client directly because the client can often be a toxic influence a distraction and I’ve seen situations where experts have just spent too much time with the clients and have begun to embrace the biases of the client it’s very important for the expert and the attorney to understand that the expert has to define what it is that the expert needs this is what I need to value the business these are the financial records that I need these are the legal documents that i need this is the research that I need to do these are the things that I I want you to get for me go get them for me it’s important that the expert approach it from that standpoint and communicated to the attorney because often I’ve seen attorneys hand a stack of documents and a deck of evidence that the expert and the expert will limit his or her analysis to that deck of evidence now what happens is it puts the expert in a situation where evidence has been filtered it’s been distilled it’s certain evidence has been excluded from the decadent biases the experts opinion the expert needs to do everything that he or she can do to remain unbiased and to communicate to the attorney but that’s what he or she needs to do it’s a big challenge it sure is and you know what understanding that it’s a challenge understanding how to deal with the challenge and dealing with it effectively is something that comes through experience and for many experts it takes years for them to embrace it and that’s why it’s important to have a mentor right that’s why it’s important to have someone for whom you can pick up the phone say hello I’ve run into this situation this is what I’m dealing with how would you handle it or what advice can you give me there’s a little song that I’ve heard once or twice kind of starts off with cat rates and discounts and cash flow projections are you familiar with that song I am very familiar with that song as much as I wrote the lyrics to that song you know it’s what it’s become one of my favorites and if you don’t mind I like this for us just you know maybe run through a couple bars it or just kind of enjoy a moment together and just sing that song we can do that sure let’s hit it Michael cap rates and discounts and cash flow projections rev rules and case law and obscure code sections Abraham updates and bits into John Marcus bill Hanlon to name just a few annual conferences great education member support from the organization professional partnerships industry stats

we value the shares for your flips and your grads listed proudly with your vitae and a CV a for qualified experts in bv today let knack the show you the way wonderful love that song I remember when we did in Las Vegas our conference a few years ago we brought in that opera singer and we did the whole spoof on on rockin Idol I remember them that was great while a conference is so important for people to attend and these events beyond just the education the conferences are packed with a level of energy that you don’t get in other sessions in other settings look at the conferences first of all you get cutting-edge education you get the current updates you you learn what’s happening in the field you learn how other professionals are dealing with it you get to meet the leaders in the profession you get to speak one in one one-on-one with leaders of the profession you get to speak with colleagues with other professionals in different parts of the country you get to speak with people who who are experienced and very capable in dealing with many of the challenges that may be new to you you also get to meet people who you can bring in to matters that you have people who have specific expertise whose expertise you can draw upon when you run into a project that has a specific need for their expertise and candidly I’ve done that many times I can’t begin to tell you how many times I’ve gotten on the phone and I’ve called members of NAC VA who are in different parts of the country and brought them in on cases associated them in on cases so that I could deliver to my clientele to my referring attorneys to my clients a level of service that I couldn’t be for all the networking is unbelievable other fun events there are a lot of fun yeah usually people will see you on sight teaching and also with a camera you’re an avid photographer talk to us about your passion your love for photography and what kinds of things you’ve worked on in addition to wildlife and some architectural and city scenes will tell us about your passion on your love for photography in 1955 many many years ago my father gave me my first camera it was a brownie hawkeye camera i fell in love with it i started photographing everything that I could family friends my local area I take the camera to school with me wherever I went I took the camera and my father kind of lit a fire in me and my passion for photography has just grown and grown and grown I see the world through the camera lens wherever I travel I try to capture the pulse of the city i’m traveling to New York Chicago New Orleans various cities across the country Atlanta whenever I travel I take a camera with me and I walked the city it’s important that I walk and I meet people and I talked to them and I converse with them many times they don’t even know that I’m photographing them I’ll have the camera hanging around my neck and as we’re speaking as you and I are speaking right now i’ll be firing away and i’ll come back with with candids they’re just really really candid i put smiles on people’s faces I mean it’s photography is one of my ways of delivering sunshine to other individuals I’m currently working on a project on a documentary that I hope to release in about a year it’s going to take me another year to bring it all together on the homeless individuals in various cities homeless people their spirituality the plight that they’re dealing with you know how they deal with the greater community how the greater community deals with the homeless that’s one of my current projects and I hope will be I hope that’ll make a difference I recognize how blessed I am in my life I wake up every morning I count my blessings and I realize that I have an obligation to give back and if I can give back through my photography if I can give back by helping the homeless by helping my community by helping my local community I do a lot of work do a lot of work in my synagogue I you know that I have a disabled child my youngest child has multiple disabilities and brandon has has really given me the opportunity to learn about the world of children with special needs and become involved in the world of special needs I as I

tell the story I married well and I had the right children and my wife is an attorney who has dedicated her life to helping children with special needs so together we attempt to make a difference we do what we can and those of us who are fortunate those of us who have been blessed in this lifetime I believe we have an obligation to give back we have an obligation to help those who haven’t been blessed the way we have you’ve definitely done that not only professionally but obviously personally and I honestly can say that I have been grateful and enjoy getting to know you over all of these years that we work together you made a great impact on me professionally personally and many others in the industry to we appreciate you Michael for all that you’ve given thank you Brian and that goes in both directions preciate right thank you we hope you enjoyed this installment of conversation with the Masters this conversation with Michael Kaplan our next installment will feature conversation with Roberts legal there are some types of businesses that operated under normal conditions past decade that are literally walking zombies right now see you next time

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