Business Valuation Services
What is my business worth? This is a question on many business owners' minds. They have worked hard to build their business but are not sure how much it is worth. They may be nearing retirement and/or want to sell. They may want to pass their business on to the next generation and avoid paying too much estate or gift tax, or unfortunately, going through a divorce. Whatever the reason, Hogan & Slovacek can provide the valuation solution.
Valuation Professionals
We have trained valuation professionals who have attained the Certified Valuation Analyst (CVA) designation from the National Association of Valuation Analysts (NACVA) and the accredited in Business Valuation (ABV) from the American Institute of Certified Public Accountants.These designations signify a level of commitment and training in valuation fundamentals, techniques, and theory. They must also pass a rigorous test and take continuing education in the valuation field to maintain these designations. In addition, the CVA and ABV must also be a CPA, which means they approach valuations from a business perspective. Our valuation professionals can deliver to the business owner a professional valuation that we stand behind.
Why a Valuation?
Ownership interests in privately held companies often represent a significant portion of one's estate or investment portfolio. Since there is no active market for the trading of such an interest, a valuation may be needed to determine the value of the interest. There are a variety of reasons to have a valuation performed including:
Buy/Sell Agreement
Charitable Contributions
Gift Taxes
Gifting Programs
Estate Taxes
Disruption of Business
Divorce
Obtaining Financing
Partner Disputes
Sales or Merger
Succession Planning
Hogan & Slovacek can tailor a valuation to your specific needs. We provide valuation solutions to help you achieve your specific objectives. Contact our valuation department today to see how we can assist you.
Estate & Gift Tax
At Hogan & Slovacek, we see many individuals forming family limited partnerships or limited liability companies as a way to manage family wealth. Once assets are put into one of these entities, the sum of the fair market value of the underlying assets is rarely the value of the overall entity. The limited partnership or LLC wrapper has effectively tied up the assets by placing restrictions on sale of the interests, and limiting control over the underlying assets to the general partner or managing member of the LLC. When the owner transfers equity interests in these entities, the value is rarely just a pro-rata share of the underlying assets, but is probably something less.
Assuming there is a realistic business purpose for using these vehicles, there is the potential to reduce your estate or gift tax burden maximize your lifetime and annual gifting through the application of marketability and lack of control adjustments. This means you may be able to transfer assets to your heirs at a reduced value overall. However, you must support the value determination. We provide that support with a professional valuation of the interests being transferred.
The usual standard of value used in valuations is “fair market value” as defined in Internal Revenue Service Revenue Ruling 59-60:
“The price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.”
That fair market value standard is applied in most estate and gift situations. However, fair market value may not be the highest price the business could command. In the estate and gift area you are considering a hypothetical buyer whereas in a buy/sell situation there is a specific buyer that is driven by differing objectives. The business owner may be able to sell the business for more than fair market value to a "strategic" buyer who wants to expand their geographic area or gain efficiencies from the purchase. Depending on the purpose of the valuation, the value determined for the company may vary.