Business Valuation Services
Kenneth J. Mueller, CPA, CRFAC, CFC, CVA, began providing business valuation services in 2006.
Business valuation assignments will vary depending on their purpose. Therefore, it is important that we understand the purpose of the assignment before the process can begin. More often than not, the purpose will influence the standard of value, the methodologies used, the level of research performed, and possibly the date of the valuation. Business valuation assignments may be for an entire company, a fractional interest in a company, or a bundle of assets (and maybe liabilities) that are going to be sold. Whether the company is large or small, the valuation theory is the same. If the valuation is of an interest in a company, there may be certain types of valuation discounts associated with them.
Business owners, CFO’s, investors, shareholders, CPA’s, attorneys, fiduciaries and others need business valuations for many reasons. Below are some of the purposes for which we prepare business valuations.
Acquisitions and Mergers
Business valuations are often performed when one company wants to acquire another, considering anticipated synergies. In a merger, each business is typically valued on a stand-alone basis. Then, the two businesses are valued as if combined. This process gives each firm guidance on how much can and should be paid for the other.
Selling a Business
Sellers of businesses usually want to know the fair market value of the business before entering into a transaction. Sellers often want to know the most probable selling price before going to market.
Partnership or Shareholder Agreements
Agreements between partners or shareholders, often a buy-sell agreement, should be based on a business appraisal rather than some simple formula. This story has been told many times. A group of talented individuals start a business. Initially they contribute different assets to the company for their share of ownership. The company grows and becomes successful. Unfortunately, what also grows is dissention between the partners. Some shareholders or partners have the foresight to structure a clear, concise buy-sell document at the start of their business. Others do not.
Often, an appraisal is performed when a shareholder, such as a professional, is buying into a business or professional practice or when they want to sell out and move on.
We offer valuation services in these situations, and where practical, offer recommendations for an equitable solution.
Marital Dissolution (Divorce)
During a divorce, a closely-held business is usually a significant marital asset. Often, an appraisal is done by an appraiser hired by each spouse. However in some cases one appraiser is retained by both parties to prepare an objective value acceptable to both parties. Each appraisal should be totally objective regardless of which side has retained the appraiser—however, in practice this is often not the case.
Estate Planning for Gifts or Inheritance
Interests in closely-held businesses can be transferred during the lifetime of the owners to minimize the estate taxes that will be due on the death of the owners. Business appraisals are typically required and must be filed with the Internal Revenue Service along with the gift or estate tax returns. Often, these reports are closely scrutinized by the Internal Revenue Service. For this reason, it is important to retain a highly qualified and experienced business appraiser to prepare the needed valuation.
Business Succession Planning
Two critical questions; when can I retire as a business owner and what happens to my company? We not only help you determine the value of your company but we also offer succession strategies to optimize the value of your business, determine the best exit strategy and structure the transaction to maximize tax savings.
Litigation Issues involving Lost Profits or Economic Damages
These types of cases need a business appraisal to establish the amount of damages that occurred. Often, the business must be valued twice. Once, at the present time and the other as if the action that resulted in the problem had never taken place. The difference represents the amount of damages.
Dissenting & Oppressed Shareholder Litigation
Stockholder disputes arise from a variety of reasons. Often, the problem is a minority shareholder that is not receiving any dividends or other return on their investment in a closely-held company but watches the majority owner take huge amounts of money and benefits out of the company. In this type of litigation, a competent business appraiser and a comprehensive valuation is a necessity.
Financing
Banks are increasingly requiring business valuations for business financing. The Small Business Administration (SBA) requires valuations in some cases. Other financing arrangements, whether through a financial institution or private parties often require a valuation with periodic up-dates. We offer valuation services to meet this need.
Other Reasons for Valuations
There are many other reasons for a business appraisal. Some of these include: Allocation of Purchase Price, Liquidation or Reorganization of a Business, Conversion of a “C” corporation to an “S” or Sub-Chapter S corporation, Ad Valorem Taxes, Incentive Stock Options, Initial Public Offerings, Insurance Claims, Charitable Contributions, Eminent Domain Actions, etc.
Valuation Subjects
Accounting Alliance for Small Business, P.A. values businesses and intangible assets. Businesses include all types of operating companies such as service, manufacturing, distribution, retail and professional service businesses. Businesses can range from early-state technology companies to mature multi-generational family-owned and operated enterprises. Businesses also include holding companies that own real estate, cash, securities and other investments. Intangible assets generally include patents, trademarks, trade secrets and license agreements.
Kenneth J. Mueller, CPA, CRFAC, CFC, CVA is experienced, tested, and certified by the National Association of Certified Valuators and Analysts (NACVA). NACVA’s designations are the only valuation credentials accredited by the National Commission for Certifying Agencies (NCCA).
To learn more about business valuation services offered by Accounting Alliance for Small Business, P.A. contact us today.
