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BUSINESS
VALUATIONS
 There
are various reasons to have your business valued and a multitude
of business valuation values. The following are some typical reasons:
Buy/Sell Agreements
The value is determined
to avoid possible future problems for partnership or stockholder
buyout. This methodology can simplify discussions during the life
of the operating agreement.
Buy/Sell Transactions
Value is established
for the purchase/sale of a business or professional practice.
It can also determine value of partial ownership interest.
Corporate/Partnership Dissolution
An appraisal would
be necessary to determine the 'Fair Market Value' of the business
to determine the equitable distribution of the assets and intangibles
of the business for settlement purposes.
Estate/Gift Tax
To minimize problems
with the IRS it is important to determine the correct amount of
discounts and be able to support them.
Succession Planning
It is necessary
to determine the 'Fair Market Value' of a family owned business
for equitable distribution of shares to each shareholder.
Employee Stock Option Plans(ESOPS)
It is important
to establish 'Fair Market Value' under these plans for the purchase
or contribution of stocks.
SBA Loans/Financing
Business loans are
subject to the appraised value of the going concern business and
assets. We prepare our reports to comply with the SBA's SOP 50
10 5b that became effective 09/01/2009, and to be USPAP compliant.
Intangible Assets
Many times it is
necessary to determine the separate values of the tangible and
intangible assets, and real property and personal property for
legal, financial, accounting, and taxation reasons.
Financial Accounting Standards
Board (FASB) 141/142
Valuation services
are required for the allocation of the purchase price amongst
the tangible assets and intangible assets such as Trademarks,
Trade Secrets, Patents/Copyrights, etc. for compliance.
THE PROCESS
In the Initial Phase
which is FREE, and CONFIDENTIAL we strive to understand your particular
circumstance through discussions and questions, and then recommend
solutions for your situation.
Upon deciding to
move forward, we would draft a Engagement Agreement which details
what is to be valued, the type of value sought, and the intended
use/users of the report, along with the agreed upon fee and payment
structure.
We would then have
you fill out a questionnaire, and supply you with a documents
needed request. Once all the required information is received
we begin the development phase. We will analyze the information,
and make the necessary adjustments of the cash flows. We then
research the demographic and economic data relating to your particular
business market. The various valuation methods are then reconciled
to form an opinion of value. We then begin the reporting phase,
and write the report in the agreed upon format.
Three types of Report Formats
1. Formal Appraisal Report
This involves a very comprehensive
study of your business, the industry section and markets in which
it does business in. We will make an on site visit, interview
the owners or managers, and analyze five years of business financial
information.
2. Limited Appraisal Report
We will make an on site
visit and interview the owners or managers, analyze three to five
years of financial information, and a limited market study of
the industry section doing business in.
3. Restricted Use Appraisal
This report type is for
internal use only, and reports an opinion of value with out any
supporting information.
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