Appraising Companies

An outdoor advertisement firm that has filed a law suit against the city of Los Angeles states that their billboards are becoming unprofitable due to the palm trees that the municipality has planted. The requested damages amount to 18 million dollars. A coffee company sues a competitor on the grounds that it uses the first company’s formula. They want indemnity for the losses that they incurred due to unfair competition. In both these cases, who would determine the losses of the plaintiff and under what criteria?

To give other examples, what if you were going to sell your company or you wanted to buy another company? Or what if a firm needed to be divided among heirs, but the will of the founder does not specify who gets what. The first thing you would need to do is find out the value of the company.

The Los Angeles, CA based Sanli Pastore & Hill (SP&H) tries to shed some light on such topics as the above. SP&H is known for its skill in evaluating the value of companies. The experts at Sanli Pastore & Hill also act as witnesses in cases involving firms in disagreement. They appraise nearly more than 150 companies each year, acting as expert witnesses in courts throughout the US. The firm’s expert witnesses have appeared in over 250 court cases.  With nearly 25 employees, SP&H is the largest appraisal firm in California and one of the five largest firms in the US in this industry.

The name Sanli comes from Nevin Sanli’s last name, the founder and principal shareholder of the company. Born in Izmir, Sanli received his economics degree at the University of California in Irvine. It was his idea to set up a professional company that would specialize in assessing the value of firms.

WENT AFTER THE FISH
Mr. Sanli, who says that he saw the importance of analysis in determining the value of a company while he was working at a trade bank after school, states, “This was a good opportunity for me, so I decided to go after it.” Once he decided to pursue this goal, he locked himself up in a library to research the field.  He read books about the profession.  When his research was done, he quit his job at the bank and went to work for a company that specialized in value appraisal.
With his current partners Thomas Pastore and Clinton Hill, Mr. Sanli established his own company in 1992, in which he holds 66% of the shares. Although Clinton Hill left the firm later on, his name remained on the company’s masthead.

Mr. Sanli’s partner Thomas Pastore, with whom he has worked for many years, is the other manager whose name makes up part of the company name. Mr. Pastore is the CEO of SP&H and has appraised over 1000 firms throughout his career.

Nevin Sanli is the Chairperson in the appraisal firm.  Apart from the headquarters in Los Angeles, the company has an office in Sacramento. He has also appraised over 1000 firms throughout his career.

SP&H does not appraise firms only within the US. In 1994, Mr. Sanli was invited to Nepal by the Nepalese government for 3 weeks, where he worked to determine the sale prices of three government companies that were up for privatization. When we asked him the question, “Would you go to Turkey if you got the same offer,” he answered, “The prices in Turkey are too low and in these kinds of operations where international travel is necessary, the cost is too high. The firm should be compensated for the work performed and as there is no other Turkish speaking person in the company, I would have to go. That would be a little difficult.” He also tells us that he once appraised a friend’s company while vacationing in Izmir for the summer.

HE DEFENDED THE CITY OF LOS ANGELES
The 150 companies that SP&H appraises each year are all worth 10 million dollars or more. SP&H’s  clients include such giants as Cal Fed, Enterprise Rent-a-Car, Wells Fargo, Texaco, Lockheed, and Sears Roebuck, all of which operate in various industries in the US. Mr. Sanli points out that financial institutions such as Merrill Lynch and Goldman Sachs hire them from time to time because their firm in California has more experts than the local offices of these firms.

Mr. Nevin Sanli also acted as an expert witness in an interesting case in 2001. The civil suit for damages that the California based Regency Outdoor Advertisement filed against the City of Los Angeles is a good example that anything can be turned into a lawsuit in the US. Regency filed an 18 million dollar lawsuit based on the claim that the palm trees on Los Angeles Century Boulevard blocked the view of the firm’s billboards and made them incur losses. Working with the city government, SP & H proved that the palm trees did not cause any losses and saved the city 18 million dollars.

HE CALCULATED THE LOSSES OF THE SOY COFFEE FIRM
One of the cases for which the expert opinion of Mr. Sanli was called upon involved a dispute between the partners of a soy coffee producer, Incognito Coffee Alternative Corporation. A lawsuit had been filed on the basis that Ronald Marinaro and Jeffrey Dash, who were partners in Incognito, which was established by their friend William Richert, later on used the secret coffee formula and business plan that they learned at Incognito for their own company, Rocamojo. Incognito hired SP&H in order to calculate the losses incurred. Mr. Sanli and his team determined the losses of their client by analyzing the losses of Incognito and the income and expense items in the financial reports of Rocamojo. At the hearing held in Los Angeles, the court determined that the managers of Rocamojo committed fraud. As a result, SP&H helped its client Incognito to receive 14.7 million dollars for their damages after the case. One of the jurors in the case praised Mr. Nevin Sanli’s testimony and stated, “No matter how hard the defense tried, they could not shake Mr. Sanli.”

SERVICES OFFERED BY SP&H
•    Business Valuations
•    Estate & Gift Tax Planning
•    Valuations For Employee Stock Ownership Plans
•    Business Advisory Services
•    Research Support for Specific Projects or Analyses

(December 2004, Issue 15th)