Our business is to value your business. Why is a business valuation necessary?
Business valuations are performed because ownership interests in privately held companies often represent a significant portion of one’s estate and/or portfolio. The value of an interest is usually unknown because there is no active market to sell or trade that interest from which to associate a valued estimate.
Business valuations are most commonly needed to calculate estate tax upon death, split up family assets in a divorce or negotiate a value on a personal sale or merging of a business enterprise. Besides that, there are often many reasons why an owner of an interest in a privately held company might require a business valuation. Business valuations are performed to establish enterprise value or stock value for:
- Actions in eminent domain
- Buy/Sell a company
- Charitable contributions
- Damage for disruption of a business
- Dissenting shareholder actions
- Employee stock ownership plans (ESOP’s)
- Family limited partnerships
- Gifting programs and lift taxes
- Initial public offerings (IPO’s)
- Life Insurance
- Partner disputes and split-ups
- Split-ups/Spin-offs of a division on subsidiary
- Succession/Exit planning
- Venture Capital and other forms of financing
What is important in selecting a valuation professional? A valuation professional should be able to demonstrate a thorough education, training and experience that he or she has the knowledge and level of competency in valuing business enterprises.
Of the utmost importance is one’s affiliation with a recognized valuation organization such as the National Association of Certified Valuation Analysts (NACVA). Members of NACVA are required to adhere to industry standards in performing valuation services and communicating their conclusion of value. Standards are intended to assure users the services they receive meet an industry-acceptable level of due care, including thoroughness of the analysis and communicating the results. Furthermore, industry standards require adherence to ethical guidelines in the performance of valuation engagements, providing added assurance to users that the valuator they hire performs his or her services conscientiously and competently to the best of his or her abilities.