Business Valuation And
Succession Planning

Business Valuation

Every Business Interest and every Valuation Assignment is unique, presenting its own set of facts, challenges, and demands. Expert valuation of a closely-held business combines financial and economic analysis into a relevant and quantifiable representation of value

Why Value a Business

1. Gift and Estate Tax:  To minimize or eliminate problems with the Internal Revenue Service (IRS).

2. Buy/Sell Agreements: A value is established to avoid future problems for stockholders and partnership buyouts. This valuation process can greatly simplify negotiations during the term of the agreement.

3. Marital, Partnership & Corporate Dissolutions: It is often necessary to perform an appraisal to determine “Fair Market Value” of an enterprise so the equitable parties can divide the assets and intangibles for settlement of their particular dispute.

4. Fairness Opinion: The fairness opinion is a black/white finding, stating whether the deal or transaction as presented seems fair and justified. Important items included basic due diligence, analysis of risk factors, deal structure or potential conflicts.

5. Succession Planning: This is used when you wish to keep the business in the family but require distribution of shares to family members with an attached “Fair Market Value” for each share of the enterprise’ stock.

 

Through the valuation process we translate complex business valuation theory and terminology into a clear and understandable appraisal of true entity value.

Types of Valuation Report

The valuation report can be written or verbal. In addition it can be a “Limited Scope Valuation” or a “Comprehensive Valuation”. The determining factor in which form to use depends of the nature and purpose for which the valuation assignment was commissioned.

Our opinions are based upon rigorous and proven methodologies, making them highly defendable. We tell the whole story, not just the numbers. We stand firmly behind our analyses.

Business Succession Planning

If the Business Owner fails to realize the importance of succession planning soon enough a life’s work could be in jeopardy.

Family owned businesses make up 80% of the United States’ economy. Unfortunately this vital area has a poor survival rate.

The main cause of transfer failure is the lack of planning.

The Process

Succession planning is not complicated but the process is complex. There are technical and psychological issues to deal with such as:

1. Financing
2. Sibling Rivalries
3. Transfer Taxes
4. Retirement Needs of Senior Family Members
5. Are Younger Family Members Capable of Stepping into a Leadership Role?
6. Would it be better to sell to a Third Party?

The key to the successful transfer of a family-owned business is not only to structure the transfer in the most tax-efficient manner, but also to structure the transfer in such a manner as to simultaneously promote family harmony, continuity, and leadership. The implementation of a successful plan assures the safe passing of the torch.

 

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