Determining value requires both a quantitative and qualitative analysis.
The value of an ongoing business requires more than an appraisal of underlying assets. Since most businesses are purchased for their ability to generate cash flow, the value of an operating company’s assets seldom reflects market value for a business. In addition, accounting book value only measures original asset costs that have been adjusted by accounting standards.
In preparing a valuation, we consider relevant factors as described in Revenue Ruling 59-60, including the following:
- The history and nature of the company
- The general economic outlook and the condition of the specific industry
- The book value of the stock and the financial condition of the company
- The earning capacity of the company
- The dividend-paying capacity of the company
- The existence of goodwill or other intangible value
- Sales of stock and the size of the block of stock to be valued
- The market prices of stocks of comparable companies whose stock is publicly-traded
We consider characteristics specific to the business and may use up to four different methodologies, depending on the type of business as well as the quality of information available. Those methodologies are: discounted cash flow analysis, capital market method, transactional market method and adjusted net worth.
Our professionals have experience in providing valuations to businesses located throughout the United States and Canada which range in size from sole proprietorships to companies with revenues in the billions of dollars in nearly every industry, including manufacturing, wholesale distribution and service companies in virtually every conceivable scenario, from estate planning to complex mergers. Today’s business environment is fast-paced, complex and competitive. Business Valuation Group, Inc. will provide you with valuation services that meet your deadlines.
Situations which may require a valuation are as follows:
Estate and Gift Tax Planning:
Our valuations of privately held businesses and family limited partnerships provide the basis for determining potential tax savings. We have successfully defended our valuations before the Internal Revenue Service in the past, and will do so again, as necessary.
Litigation Support:
Recently, a number of states have mandated an equitable distribution of assets as part of the terms of a divorce. In addition, many have adopted statutes that provide minority/dissenting shareholders with the right to an independent appraisal of their holdings, in order to determine a repurchase price. We can prepare a valuation that provides the repurchase price and offer expert testimony in court.
Mergers, Acquisitions and Sales:
Our independent valuations can provide an accurate basis for use in assessing the merits of a merger, sale or acquisition. We can provide the valuation and can help present the proposal to shareholders.