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Business Valuations
We provide our clients with accurate, high quality, independent valuation services. Businesses are appraised for a variety of reasons which include but are not limited to the following:
Allocation of the Purchase Price Among the Tangible and Intangible Assets
The IRS requires the purchase price of a business be allocated among the tangible and intangible assets. The outcome of an inconsistent allocation of the purchase price can be an increased tax liability and penalties. Appraisals are performed to comply with these requirements.
Bank or Other Financing
The Small Business Administration (SBA) requires every SBA-guaranteed business acquisition over $350,000 to be supported by an independent appraisal performed by a qualified appraiser. Our appraisers meet the SBA’s criteria for qualified appraisers.
Buy-Sell Agreements
Buy-sell agreements are common among owners and bring liquidity to a selling owner and ownership retention to the remaining owners if they are written correctly.
The terms in these agreements can be broad and at times unclear. They can also be outdated and give an inaccurate value.
Having a business appraiser review the buy-sell agreement before a trigger event can be helpful to avoid disputes.
Periodically reviewing the agreement is also recommended to update it with the needs of the owners.
Buying or Selling an Entire Business
Business appraisals are always a good idea when it is being bought or sold.
To ensure an accurate value, owners and potential buyers hire us.
Buying out a Shareholder or Partner
At times owners part ways. A partner may want to pursue other interests, has become disabled, or has died.
Typically, each involved party had a different opinion of value.
One element to a smooth transfer of ownership is having an appraisal performed by a certified business appraiser.
Condemnation Proceedings / Eminent Domain
Eminent Domain allows federal, state and local governments to acquire private property following the payment of just compensation to the property owner.
Appraisals are performed to obtain an opinion of value for the just compensation.
Economic Damages
Damages can occur due to many situations including contractual disputes and torts leading to lost profits claims.
Employee Stock Option Plans (ESOPs)
ESOPs are an ownership agreement funded by the employer. An ESOP gives capital, liquidity, and tax advantages to the owners.
Appraisals are required to comply with department of labor and IRS regulations and guidelines.
Estate Planning and Taxes for Gift or Inheritance
Businesses can be a significant part of any estate. When an owner dies, the taxpayer can choose an appraisal values on the day the owner dies or six months after the date.
Sometimes the company’s value changes substantially between these two dates.
By knowing the value on both dates and using the lower value, the taxpayer may be able to save a significant amount on taxes.
Money can also be saved by gifting stock to family members before the owner dies.
Litigation and Dispute Resolution
Business appraisals are used in many litigation matters. Some of the most common ones are listed below.
• Bankruptcy
• Breach of Contract
• Economic Damages
• Dissenting Stockholder Actions
• Patent Infringement
• Lost Profits
• Stockholder Oppression
• Insurance Claims
• Marital Dissolution
• Contract Disputes
• Business Interruption Claims
• Antitrust Claims
Marital Dissolution / Divorce
In a divorce, a couple’s assets and liabilities are valued.
If a business is part of the marital assets, an appraisal is an essential part of the process.
Mergers & Acquisitions (M&As)
Acquisitions may be for the entire company or a partial interest. In a merger, both companies are generally valued.
Businesses may wish to split up or spin off a division.
In any of these cases, having a well written appraisal report by an independent appraiser can be beneficial in negotiations.
Minority Shareholder Oppression and Dissenting Stockholder Actions
Minority Shareholders can sue the business if they can demonstrate minority oppression or an extraordinary corporate action and be paid the fair value of their shares.
Appraisals are used to obtain the value of the minority shareholder’s shares.
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