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Business Valuation Insights
Factors to Consider When Valuing a Closely Held Company
November 20, 2013 / in Business Valuation / by Al Statz
Revenue Ruling 59-60 was developed by the Internal Revenue Service to provide guidelines for the valuation of closely held companies. The ruling specifically addresses stock valuations for gift and estate tax purposes, yet the principles set forth are commonly applied in a wide spectrum of business valuations, including those prepared for employee stock ownership plans, charitable contributions, shareholder buy-sell agreements, mergers and acquisition transactions, SBA loans, corporate reorganizations, marital dissolutions and bankruptcies. Revenue Ruling 59-60 suggests analyzing …
Importance of a Proper Valuation before Offering a Business for Sale
November 9, 2013 / in Business Valuation, Exit Planning, Sell a Business / by Bob Altieri
Lately I’ve been spending a lot of time working on an acquisition search for a client, and in this process I found many business offerings that were priced far too high and several that were under-priced. From a buyer and seller perspective, overpricing is a massive waste of time. At the other extreme, when price is set too low, seller’s leave hard-earned money on the table. Both situations can easily be avoided by obtaining a proper business …
IRS Requires Qualified Appraisals from Qualified Appraisers
November 6, 2013 / in Business Valuation / by Al Statz
Taxpayers should be aware and tax practitioners must know that Internal Revenue Service regulations for filing of estate and gift tax returns and charitable contributions involving business interests worth more than $5,000 require a qualified (business) appraisal by a qualified (business) appraiser. How do our friends at the IRS define these terms you ask? Please read on … The IRS defines a qualified appraisal as an appraisal report that: is made, signed and dated by a qualified appraiser …
Engagement Review: Valuation for Partnership Dispute
October 3, 2013 / in Business Valuation / by Roy Martinez
Recently, Exit Strategies was engaged to perform a business valuation to resolve a dispute between partners in an Environmental Consulting Firm. Facts and Circumstances There were four equal partners (LLC members in this case). The firm’s business model had evolved over the years in response to changing market conditions, and the owners’ objective was to have one of the partners leave the firm and have the remaining partners acquire the equity of the departing partner. …
Role of Business Appraisers and M&A Advisors in Estates and Trusts
August 8, 2013 / in Business Valuation, Exit Planning / by Al Statz
I was recently asked about Exit Strategies’ role as business appraisers and M&A advisors in estates, estate planning and trust administration. Here was my answer … Business Valuation (a.k.a. Appraisal) As business valuation experts, we provide fair market value appraisals of closely-held corporations, FLPs and LLCs for estate planning, gifting, estate tax, charitable donations, buy-sell transactions and succession planning. We value fractional interests in operating companies and asset holding companies using appropriate discounts. Our appraisers …
Goodwill Part II: Goodwill vs. Goodwill Value
March 22, 2013 / in Acquire a Business, Business Valuation, Sell a Business / by Bob Altieri
All businesses have goodwill; however, not all businesses have goodwill value! Goodwill, which is usually the largest portion of the purchase price of a business, is the sum of intangibles such as having a good location and trade dress, a negotiated lease in place, trained employees, a website, customers, etc. Not all businesses have goodwill value, which is measured by the amount of earnings the business produces adjusted for the risk of earnings continuing to …
Goodwill Part I: Personal versus Enterprise Goodwill
February 22, 2013 / in Acquire a Business, Business Valuation, Sell a Business / by Bob Altieri
Goodwill can exist in two different forms: Personal Goodwill, which is defined as an intangible asset that is attached to a person; and enterprise Goodwill, also an intangible asset that is attached to the business enterprise. If goodwill is attached to an individual, it is non-severable since the person to which it is attached is not being sold. This also implies that the asset is non-transferrable. Of course brokers often make contractual arrangements between the …
Independent Valuation Litigation Support
January 18, 2013 / in Business Valuation / by Bob Altieri
This week I was asked to value a medical practice, relating to a dispute between shareholders. Before I head off to my secret fishing spot for the weekend, I want to share these thoughts about how independent valuation experts assist in the litigation or dispute resolution process. Business valuation and transaction professionals are frequently engaged as independent financial experts for purposes of assisting in dispute resolution, litigation, or potential litigation. Litigation support services include any professional …
Expiration of $5.12 Million Gift Tax Exemption Presents Unique Gifting Opportunity
November 9, 2012 / in Business Valuation, Exit Planning / by Al Statz
As a result of the tax cuts enacted under former President George W. Bush and extended under President Barack Obama, the estate and gift tax currently is set at a maximum rate of 35% with a $5.12 million exemption amount. But unless Congress takes action, the maximum estate and gift tax rate will revert to 55% and the exemption amount to $1 million, effective January 1, 2013. It is uncertain what, if anything, Congress will …
Business Valuation Rules of Thumb
September 21, 2012 / in Business Valuation / by Bob Altieri
A valuation “Rule of Thumb” is a mathematical relationship between price and one or more variables, based on experience, observation, hearsay, or a combination of these, applicable to businesses within a specific industry. The Business Reference Guide published by Business Brokerage Press is a common resource for people involved in valuing, buying or selling privately held businesses. The guide contains rule-of-thumb and pricing tips on hundreds of types of small businesses. Below are a few of …
Exit Strategies Group, Inc. is a leading provider of business sales and acquisitions, business valuations, and exit planning services for family owned and closely-held companies since 2002.
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