Meet the Transfer Pricing & Valuation Specialists from Valentiam Group

The more you know about Valentiam, the more you’ll know why they're trusted by leading corporations.

Finance Monthly speaks with Dan Peters, the Managing Partner of Valentiam Group – a firm focused on transfer pricing and valuation that spun out of Economics Partners in 2018. Dan has practiced transfer pricing and tax valuation for over 25 years, and previously led global practices at KPMG and Duff & Phelps.
Valentiam currently has 7 Partners and about 20 professionals in the company’s offices in New York, Dallas, Salt Lake City, Los Angeles, Seattle and West Palm Beach.

The firm serves clients from the middle-market to the largest and most complex multinational firms and focuses exclusively on transfer pricing and valuation matters, which are primarily for tax purposes – such as property tax valuation, valuation of legal entities within a related-party group structure, or valuing specific intangible assets.

All of the firm’s Partners are leaders in their specialties and Legal Media Group lists each of Valentiam’s transfer pricing Partners as ‘Leading US Transfer Pricing Advisers’.

Below, Dan tells us more about the work they do and the things that set them apart from other tax advisories.

 Tell us about the beginnings of Valentiam Group? What inspired the founding of the company?

Valentiam Group’s origins date back to when I started my own practice in 2009. We ultimately entered into a collaboration with Economics Partners in 2013. EP later sought and found a transaction to be acquired by Ryan and Company, which was finalised last year.

Everyone from my original team and several of the other Partners that have been with us for many years weren’t interested in that transaction, so we decided to establish an independent firm focusing on our specialties. So we tried to create Valentiam as a perfect platform for 2019, rather than 1919.

So we tried to create Valentiam as a perfect platform for 2019, rather than 1919.

What was the process of creating the new brand like? How did your clients react to the new brand?

Creating Valentiam in 2018 was a lot different than starting my own firm a decade ago. We used ‘crowdsourcing’ to help us choose a name, design a logo, and develop our website. It was astonishing to see how radically different and better that process can be when you use technology.

Our clients have been incredibly loyal to us. My experience in our industry is that clients are primarily focused on the quality of the adviser and the work product that they produce. None of that changed with us when we rebranded as Valentiam and the transition has been as smooth as we could have hoped it will be. In fact, our clients are as excited as we are about the new platform and what it means for them.

What are the company’s overall principles, beliefs and mission?

Our mantra is that the firm’s purpose is to support our advisers and clients. There are three actors in our business – the advisers, the firm, and the clients. We fundamentally believe that way too much of the value in other platforms is attributed to the firm.

The typical firm ends up bloated – with Senior Partners acting as administrators and the overhead part of the firm unnecessarily consuming resources that should be invested in serving clients in a better way or paid to the advisers. All this drives up costs and thus, prices for clients, and results in the actual advisers earning only a small fraction of what is billed to the clients. This is why our core principle is that our primary focus should be on serving clients and developing our team of advisers.

Our other mission is to be an independent provider of transfer pricing and valuation services, as we understand the synergies and complexities between them and we see the value in being independent.

Combined, these differentiators allow us to reward and grow our top performers’ careers, providing our clients with better advice and fairer billing rates.

What makes Valentiam Group a different platform for both clients and professionals that practice transfer pricing and valuation?

Our platform is optimal for both our clients and our professionals for three reasons. First, we are extremely low overhead. We have no Partners who are administrators – actually we don’t have administrators at all. I spend the great majority of my time advising clients. We either outsource administrative functions or leverage technology to perform the routine functions of a professional services firm.

Second, all of our professionals share in the success of the firm as our compensation model has more risk and reward than what the industry typically offers. That helps align the incentives of all of our professionals to be focused on serving the client.

Third, we have a much flatter structure than our competition – it’s really an ‘apprentice model’, where our young professionals work directly with Directors and Partners. Our staff/Partners ratio is roughly 1.5 to 1 – compared to leverage ratios of about 8 to 1 in big accounting firms.

Combined, these differentiators allow us to reward and grow our top performers’ careers, providing our clients with better advice and fairer billing rates. It also allows our Partners and younger professionals to work closely together in the trenches on client matters, which is satisfying for both sides.

How do you best help companies set their transfer prices and manage their transfer pricing risks?

Setting transfer prices is by definition subjective, and we sometimes say that we are only limited by our imagination in thinking of how third parties would transact with one another.

But in today’s world, the transfer pricing risks that our clients face – which obviously include tax risk, but also reputational risks and even the risk of disruptions to operations – as a result of inappropriate transfer pricing are so great that we have to be extremely careful to ensure that the advice we give to our clients is absolutely correct and defensible.

We can’t be certain that what was acceptable in the past will be so in the future. Our clients need to be sure that the economics of what we do are sensible. The best way we’ve found to do that is to ask: “Would both parties agree to this price or value?”. We make sure that our analysis holds up for both the buyer and the seller.

What makes your property tax advisory business unique?

Carl Hoemke, who leads that practice for us, has been an innovator in the property tax space throughout his career and has developed property tax compliance software that is market-leading. He focuses on valuing complex assets for the largest companies who have the highest property assessments.
Carl is planning to make us the key player in the complex property tax valuation area – we’re going to do some exciting things in the next 12 months!

Setting transfer prices is by definition subjective, and we sometimes say that we are only limited by our imagination in thinking of how third parties would transact with one another.

Why do you focus on valuation for tax purposes?

Tax Valuations require the practitioner to understand tax. We see tax valuation studies that are fundamentally wrong because the adviser didn’t understand the purpose of the transaction, or the risk profile of the entity within a larger group. Since we focus exclusively on tax matters, we believe we do this work better than other firms.

What are the synergies between transfer pricing and tax valuation?

It starts with the skillsets of the advisers. The training, databases, methodologies used – there are more similarities than differences in the skills required to perform a valuation study and a transfer pricing study.

It then extends to the issues we face – one can’t be a complete transfer pricing adviser without being able to value assets, and you can’t really do solid tax valuation studies without being expert in transfer pricing.

We believe that our approach to addressing these two services in a single practice gives us a competitive advantage in attracting young professionals to our practice and in providing our tax clients with the most expert service possible.

 

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