Business Valuation Overview

A business valuation or appraisal is an independent process of determining the value of a business, business ownership interest, security or intangible asset as of a specific date. Business valuations are most commonly needed in order to calculate estate tax upon death, determine family asset amounts in a divorce, and to negotiate value in a purchase, sale or merger of a business enterprise. Other common purposes where the holder of an interest in a privately held company might require a business valuation include:

  • Business Sale
  • Marital Dissolution / Divorce
  • Estate Planning
  • Gift Taxes
  • Partnership Buyout
  • Buy/Sell or Shareholder Agreement
  • Employee Stock Ownership Plan (ESOP)
  • Shareholder Disputes
  • Insurance Claims
  • Litigation Support
  • Company Mergers
  • Financing Support
  • “C” Corporation to “S” Corporation conversion
  • Allocation of Purchase Price
  • Management Information Appraisal

Our business valuation services are performed by qualified professionals. We provide a full range of appraisal services from a Basic Business Valuation Report to a Certified Business Appraisal. There is a fixed fee for each level of service.  To better assess your needs, we offer a free half hour consultation to review your particular requirements.

Valuation / Appraisal Services

        • Broker Opinion of Value – This is a limited scope computer generated report often used in connection with the contemplated sale or acquisition of an operating business. The objective is to estimate the Most Probable Selling Price. A major benefit of this report is that not only does it support the asking price, but it also helps bridge the “bid/ask” price gap between seller and prospective buyer. Broker Opinion of Value (BOV) reports may also be useful in divorce situations in which one spouse will obtain a BOV to aid in the settlement process or to set a baseline at the beginning of negotiations. If parties cannot settle the matter, then a more comprehensive engagement would be undertaken at that time. The BOV report is based on 1 to 2 years of recent operating results along with owner’s answers to an interview and questionnaire. This report uses real world valuation methods coupled with actual business sales data taken from a database containing thousands of completed transactions. This is a preliminary value assessment. It does not include verification of financial information supplied by the owner or verification of the value of furniture, fixtures and equipment. It is not suitable to support third-party financing decisions or for Internal Revenue Service (IRS) / Court purposes. Total Fee: $1,200   Broker Opinion of Value – Sample Report
        • Basic Business Valuation Report – This restricted scope report is used primarily in non-litigation situations. A common purpose for this type of valuation would be to calculate enterprise value at the beginning of a  business transition engagement, exit planning process, or to set a baseline price prior to going to market. It is a summary business appraisal report that includes a statement of purpose / function, and an assessment of both national and local economies. It includes an analysis of 3 to 5 years financial statements and operating results. Profit/loss statements are recast and normalized to determine discretionary earnings  or cash flow. The balance sheet is adjusted to reflect owner supplied market value of the furniture, fixtures, machinery, and equipment. In addition, an industry review and ratio analysis is conducted in order to assess company performance in comparison to its peers. These results can be used to establish benchmark values and to identify areas of improvement. Approximately 50-60 pages in length, the report includes a risk assessment which examines both qualitative and quantitative value drivers. The report complies with the Small Business Administration (SBA) Standard Operating Procedure (SOP) 50-10 5(H) related to “Business Appraisal Requirements – Change of Ownership.” It explains in a step-by-step manner what was done and how the value was derived. Further, the report conforms to the Uniform Standards of Professional Appraisal Practice (USPAP). Finally, this report includes three (3) approaches based on the following valuation methods: Asset, Income, and Market based, along with the reconciliation of those approaches. It does not include verification of financial information supplied by the owner. It is not suitable for IRS or Court purposes.  Total Fee: $2,700       Basic Business Valuation – Sample Report
        • Certified Business Appraisal – This standards based business appraisal report is used for litigation support and review by third parties such as the IRS. It is developed in compliance with the National Association of Certified Valuators and Analysts (NACVA) Professional Standards. As such, a Certified Business Appraisal Report is suitable for Marital Dissolution/Divorce, Gift Taxes, and Estate Planning purposes. It is a certified valuation report which includes a statement of purpose and function, an analysis of national and local economies, an industry study, a review of 3 to 5 years financial statements with comparison to tax returns, recasting of profit and loss statements, an analysis of the balance sheet and the depreciation schedule including adjustment of machinery and equipment to Fair Market Value, the use of as many approaches to valuation as practical including Discounted Future Earnings and Market Data or Guide Line Company approaches, reconciliation of approaches used, application of minority or marketability discounts, and a post valuation client meeting as appropriate.   Total Fee: $4,500 – $7,200 (Fixed at engagement)        Certified Business Appraisal –  Sample Report