Siegel Business Valuations is qualified to value an owner’s company in preparation for sale, for fairness opinions for a partner or owner “buying in” or for “buying out” a partner or owner, estate tax purposes, divorce settlements, and independent stock valuations related to 401(k) rollover plans.
What is a Business Appraisal or Valuation?
A Business Appraisal is an investigation into the law of probabilities with respect to Business Value. Through the Appraiser’s experience and training, the Appraiser is able to project the activities of buyers and sellers in the marketplace into an estimation of price-value. In reaching a conclusion, comparison of businesses usually involves adjustments due to the individuality and uniqueness of each business.
Common Situations Requiring Valuation
Employee Stock Ownership Plans (ESOPs)
ESOPs offer tax benefits to the sponsoring company and its selling shareholders. ESOP shares must be appraised every year.
Family Limited Partnerships (FLPs) and Limited Liability Companies (FLLCs)
These legal entities allow senior family members to transfer ownership and control of business or investment assets to younger generations through a series of gifts of minority interests. Our approach to these valuations includes developing appraisal reports which properly support the value-driving decisions and the size of all discounts taken based on a reasonable assessment of the facts and circumstances.
Franchise Valuation Programs Available
Franchisees do not necessarily understand the value of their businesses, or how to improve the value as they head towards an exit. SFG has found that when a Franchisee reviews a business valuation and sees the factors and key performance indictors that drive the value, the Franchisee often focuses on those drivers to enhance the value of the Franchisee’s business. Please contact us to see how a Franchise Valuation Program for your franchise system can drive value.
Gifting and Estate Planning / Settlement
When it is time to transfer ownership interests to loved ones, it is important to minimize the tax impact. Careful processes must be followed to manage the tax impact and reduce the possibility of successful IRS challenges. We provide thorough, comprehensive appraisal reports which determine, substantiate and defend our value conclusions.
Intangible Assets and Goodwill
Accounting rule changes from 2001 require that the purchase price in a transaction be allocated to the target company’s tangible and intangible assets (SFAS No. 141); and that the resulting goodwill be examined every year and tested for impairment (SFAS No. 142).
The end of a marriage is an emotionally charged situation in which there is often wide disagreement between the parties regarding the valuation of a business or professional practice. Such appraisals usually focus on two very complicated issues: the value of goodwill and valuation discounts. Goodwill is an invisible asset that usually does not appear on the financial statements. It consists of components such as the reputation of the business and its employees, its trade secrets, location, and many other factors. It may or may not, however, be a marital asset, and that is a legal determination.
In a similar vein, business interests of less than 50% often lack control over the course of a business, and there is virtually no market for them. As a result, the values of such interests are often reduced (discounted) to reflect these impairments.
Mergers and Acquisitions
At SFG Business Services, LLC, we are here to assist buyers and sellers in the sale, acquisition, or merging of businesses through business valuations and fairness opinions related to transactions.
Financial planning at the beginning of a marriage can diffuse some of the issues at the end of the marriage. By ascertaining the fair market value of a privately held business at the time of marriage through a business valuation, in certain jurisdictions one can protect the value of the business as it existed prior to the marriage from becoming community property, and only increases in value over the baseline would be considered part of the marital estate.
Valuations to Support Business Acquisitions
Many lenders require a business valuation that supports the purchase price of a business acquisition loan. SBA lenders are often required to secure a business valuation from a certified business appraiser or other similarly qualified business appraiser. If you are a lender, contact Phillip L. Greenberg, CBA, CVA for information on how SFG can promptly supply professional valuation services to you.