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Estate & Gift Tax Planning When transferring shares in a corporation or interests in a limited liability company (LLC), having a business valuation performed, prior to any transfer, will determine what the shares or interests are worth to help stand up to any IRS scrutiny. If the value of your interest, plus the value of… Continue >>>
The Federal estate tax is a tax on the transfer property at death. It is applied to estates for which at-death gross assets, the “gross estate”, exceeds the filing threshold. Included in the gross estate are real estate, cash, stocks, bonds, businesses, and decedent-owned life insurance policies. Deductions are allowed for administrative expenses, indebtedness, taxes,… Continue >>>
Assessing risk is a crucial part of valuing a closely-held business. Business appraisers use risk assessments in the income approach to estimate rates of return (discount rates) and in the market approach to select valuation multiples. All else being equal, the higher a company’s risk, the lower its value, conversely lower risk (value drivers) increases… Continue >>>
This is a good time to reflect on three important and misunderstood aspects of the role of the valuation professional: The valuation professional. The nature of the finding. How are the findings used. Role of the Professional: Valuation professionals may act as either an “appraiser” or “consultant” – but not both in a single engagement.… Continue >>>
The question that arises most often for many small business owners and others interested in purchasing a business is “what is a reasonable price for this business?” To some degree, every business is unique and therefore, there is no one-size-fits-all formula to determine the value. Years ago, I was visiting with a dentist who was… Continue >>>
A buy-sell agreement can be an important tool in smoothing any business ownership transition, whether the aim is to maintain control, provide liquidity and a ready market for the stock, retain key employees or ensure an orderly ownership transfer in the case of death, disability or divorce. Of course, it’s important to decide how to… Continue >>>
The term “value” means different things to different individuals. I’m not sure who made that statement many years ago, but it still holds true today. The perceived value depends on the interpretations, circumstances and role of the shareholder(s). Without carefully defining the term “value”, a conclusion reached in a valuation report will have no meaning.… Continue >>>
When we develop an opinion of value for a particular operating business, we look at the quality of the financial information as either an additional risk factor or value driver. In business valuation and especially from an investor’s viewpoint, quality of the financial information or truthfulness of the data plays an important role. Everyone has… Continue >>>
A sale of a corporation under an asset sale arrangement should be carefully planned to establish the personal goodwill that may exist and if it is being sold in a “separate transaction” apart from the sale of the assets of the corporation. This is particularly true where a closely-held C corporation’s transaction deal is structured… Continue >>>
Most business owners know that planning for retirement is crucial. However, according to Entrepreneur magazine, very few business owners are aware of the true value they have. Many have not taken the necessary steps to receive an accurate business valuation well before considering retiring. This makes it somewhat difficult to ensure they receive adequate value… Continue >>>
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