Business valuations are performed because ownership in privately held entities often represent a significant portion of one’s net worth. The value of a privately held company is often unknown because there is no ready market in sell or trade the interest. The market value of stock in a public company is ascertainable on a daily basis because of the listed markets. Business valuations are most commonly needed to calculate estate tax, divide martial assets in a divorce or negotiate value in a purchase, sale or merger of a business enterprise. Some other reasons for obtaining a business valuation include buy/sell agreements, partner disputes, estate/gift tax planning, actions in eminent domain, charitable contributions, and succession planning.
A Professional Valuation Consultant Can Help You
Many business owners believe the value of their business is represented by an industry rule of thumb based upon a multiple of net profit or revenues. An industry rule of thumb formula often results in a valuation that differs greatly from the actual value that might be determined by a qualified business valuation professional.
Analysis and Understanding of the Business
The true value of a business requires careful analysis of the primary components that make up value: tangible assets such as real property, furniture and equipment and various intangible assets such as goodwill. Other examples of intangible assets include trademarks, copyrights, distribution rights, customer list, management team, non-compete agreements, special processes, physical location and name recognition. The value of a company’s intangible assets is often greater than its tangible assets. Valuing intangible assets requires a careful analysis of many attributes of a business where one needs the services of a qualified business valuation professional.
Some of the attributes of a business which affect risk require a thorough understanding of every aspect of enterprise dynamics, including company strengths, the competitive environment, management capabilities, weaknesses and vulnerabilities, overall expectations of the marketplace and future economic prospects for the industry. Any element that affects risk also affects value. The valuation professional must also analyze the financial condition of the enterprise and assess its future profit potential.
A determination of a company’s true profitability must be made. In order to make this determination some of the adjustments that may be made to profits include items such as excess of officer compensation, accelerated deprecation and non-recurring items.
Valuation is a time consuming process
Performing a thorough analysis, making a qualified value determination and preparing a sound report communicating the results of the business valuation easily requires forty to eighty hours of professional time. Unusual circumstances such as difficulties in obtaining information, a unique or specialized industry, or a special situation requiring additional care will often require more time to prepare the valuation.
Business Valuation Services:
- Buy-Sell Agreements
- Marital and Partnership Dissolution
- Acquisition Due Diligence and Assistance
- Purchase/Sales Price Structure
- Succession Planning
- Estate and Gift Taxes
Litigation Support:
- Expert Testimony
- Consulting and Discovery Assistance
- Investigation of Accounting Records
- Economic Damages
- Marital Dissolutions
The life cycle of a business and its owners often calls for a business valuation. We possess the credentials necessary to arrive at an objective valuation for your business. Situations where a business valuation is needed include: buy/sell agreements, marital and partnership dissolutions, succession planning and estate and gift taxes.
“I recognize that most entrepreneurs have a personal relationship with their business. Likewise, I take a personal approach with my clients.