Business Valuation

Business Commercial Valuation
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state, Trust, Gift, ESOP, Financial, 409a, IP/Patent, M&A
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Infrastructure Capital & Industrial Assets

Commercial RE Appraisal & Cost Segregation


            213-251-2400        

 
email: david@myaacg.com
 
David Hahn, CVA, ASA, MAFF, CM&AA, CCIM, MBA

Business Valuation

Our valuation team is comprised of certified and designated experts, some with over 25 years of experience, in the industry who service both national and international market segments. This level of experience allows us to consistently provide our clients with exceptional customer service. Along with a solid and honest work ethic, we provide a superior product always compliant with the standards and guidelines of USPAP. Their experience qualifies us to meet the requirements of the Appraisal Foundation, Internal Revenue Service, Lending Institutions and Courts of Law around the country. We work with companies of all sizes, tailoring our expertise to their individual needs.

 

What Is A Business Valuation?

A business valuation or appraisal is the independent and unbiased process of determining a supportable opinion of the value of a business, business ownership interest, security or intangible asset as of a specified date.

Select An Experienced Valuation Firm

Our valuations are performed by qualified, professional appraisers experienced in all aspects of business valuation and business transfers. Our valuations are performed in compliance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP) as well as the Business Appraisal Standards of the Institute of Business Appraisers. Compliance with industry standards ensures that proven peer-reviewed valuation methods are used to develop defendable opinions of value. Through participation in teleconferences and annual valuation conferences, our appraisers stay abreast of developing valuation issues and related court cases.

Why Perform A Company Valuation?

Sooner of later every business owner needs a reliable company valuation for one or more of a variety of reasons:

  • Business Sale
  • Financing
  • Shareholder Agreement
  • Shareholder Disputes
  • Divorce
  • ESOPs
  • Estate Planning
  • Insurance Claims
  • Gift Taxes
  • Litigation
  • Mergers
  • Partnership Buyout
  • "C" Corp. to "S" Corp. conversion
  • Allocation of Purchase Price
  • Valuation Reports

Valuation Products Available

  • Business Valuation Report – A formal summary report that is used primarily for non-litigation situations. This restricted-use abbreviated report is typically all that is needed for determining the selling price of a business or assisting in establishing a buy-sell agreement between partners/shareholders.
  • Business Appraisal Report – This formal comprehensive report is suitable for litigation support and review by third parties such as the IRS. The report explains in a step-by-step manner what was done and how the value was derived.

Valuation Products



Business Appraisal Report (Stand Alone Report) - This report conforms to the Uniform Standards of Professional Appraisal Practice (USPAP) as well as the Code of Ethics and Business Appraisal Standards of the American Society of Appraisers (ASA). This report contains a step by step valuation analysis using appropriate valuation methods, a detailed history of the company, as well as a thorough financial analysis of the company which includes financial forecasts, ratio analysis, common size financial statement comparison to industry, and working capital and capital expenditure analysis. This report also contains an economic and industry analysis. Finally, depending on the nature of the appraisal assignment, discounts for lack of control and discount for lack of marketability studies can be included and applied.

Business Appraisal Report (Restricted Use Summary Report) - This report conforms to the Uniform Standards of Professional Appraisal Practice (USPAP) as well as the Code of Ethics and Business Appraisal Standards of the American Society of Appraisers (ASA). This report contains a step by step valuation analysis using appropriate valuation methods, but does not include a detailed history of the company, economic and industry analysis, or a detailed financial analysis of the company. A summary financial analysis of the company is included.

Updated Report - Usually done every few years or as necessary. This report contains all the same information as the original report and conforms to the same standards and is simply updated based on the company’s latest financial information, market conditions, and changes in the economy.

Valuation Methods used include:

  • Market Methods - utilizes several different databases of market comps including Pratt Stats, Institute of Business Appraiser’s, Bizcomps, Business Broker’s of Florida, and the MidMarketComps database. Multiples of discretionary earnings are used as well as other cash flow multiples. When applicable, sophisticated statistical techniques such as data modeling and linear regression analysis are also used with the market method to provide superior results.
  • Income Approach - Single Period Capitalization Method or Multiple Period Capitalization Method (DCF Model)
  • Adjusted Book Value Method with Excess Earnings
  • Public Company Guideline Method - used for larger companies
  • Analysis of prior sales of stock of the company

If you are unsure about which report is right for your company, call today to speak to one of our Business Valuation Consultants and they will review which report is right for you and your company based on the specific needs of your company.

Reasons for Valuations

Business/Asset Valuations for Financing - Increasingly, lenders require an independent business valuation prior to approving a business loan or a credit line.

Sale of a Company - Determining the value of a business is the first step in the process of selling a business. A formal valuation performed by an experienced business appraiser will determine the fair market value of your company. A valuation will prepare you to respond to buyer concerns by addressing your company’s value and risk drivers. It will also identify sources of value and areas of your business that can be improved. In addition, knowing the fair market value of your business will prepare you to be a better negotiator.

Exit Strategy Planning - Most business owners do not plan ahead for the time when they will decide to sell their business. Often when they make up their mind to sell, the business isn’t worth what they had hoped; or isn't even be marketable. Don’t wait until a few months before you plan to retire to find out whether or not your company is marketable at a price acceptable to you. Nationally, only 20% of small to medium sized companies listed for sale actually sell. You don’t want to be part of the other 80%. Unfortunately, ownership transfers are not always voluntary. Often, an unforeseen event, such as the owner’s death, forces the transfer of ownership. Your business planning should begin well in advance of your planned exit from the business; and, it should address both voluntary and involuntary transfers. Your planning should actually begin on day one! A formal valuation with annual updates should be one of the most important tools and an integral part of on-going strategic planning and/or exit strategy planning. Don’t leave your spouse or heirs in the position of having to make the biggest business/financial decision of their lives (i.e., the transfer of your ownership interest) without accurate information as to the fair market value of your ownership interest.

Buy/Sell Agreements - If your business has more than one shareholder, a valuation is required to establish fair market value of the business to determine equity distribution when specified “trigger events” occur. Also, the valuation enables life insurance requirements (funding mechanism for your buy-sell agreement) to be more accurately determined and updated as required.

Estate and Gift Tax - Estate tax returns require an independent valuation as of the date of death. Gifting of closely business interests requires an independent valuation of the business at the time of ownership transition.

C to S Corp Conversion - Business planning to convert should have a valuation done as of the date of the change. If the firm is sold prior to the ten year holding period, there is a tax due on the built-in gain of value from the date of conversion. An independent valuation substantiates the tax calculation for the IRS.

Employee Stock Ownership Plan - There are numerous financial and tax reporting situations that require qualified, independent valuation services. Examples include when the company issues stock options or transfers or sells equity interests. A valuation is required for the company to properly report related compensation expense; and, for the recipients to accurately report income.

Litigation Support - A business valuation is often needed to establish economic damages in commercial litigation proceedings; or, to determine equitable distributions in shareholder disputes.

Insurance Purposes – Increasingly, insurance companies require appraisals be done on equipment and/or businesses that are insured.

Intellectual Property Valuation - In today's increasingly complex and highly regulated business environment, the accurate and complete valuation of intellectual property is essential.

Foreclosures – A machinery and equipment appraisal or business valuation is almost always necessary during a foreclosure of a business to determine the fair market value of all assets.

Divorce/Estate Settlements - A business is typically the largest joint marital asset and the most difficult to value. A business valuation will either be court appointed or voluntarily engaged, to facilitate an equitable distribution settlement.

Industry Appraisals

Our consultants have performed business valuations for privately held companies in diverse industries such as retail, financial services, medical practice, accounting, construction, distribution/wholesale, manufacturing, insurance, veterinary practices and transportation.

Recent appraisals by industry includes:

Agricultural Services
• Automated Trimming and Pruning

Construction
• Aluminum Enclosures, Carports
• Residential – New Homes

Contractor
• Commercial
• Concrete
• Fire Sprinklers
• Heating/Air Conditioning
• Marine A/C
• Paving
• Plaster/Stucco
• Residential
• Roofing
• Seamless Gutters, Soffits, Facia
• Site Preparation
• Utilities
• Water Tanks and Wastewater Treatment Plants

Distribution/Wholesale
• Coffee Roaster
• Glass/Windows
• Plumbing Supply
• Rubber Products/Seals
• Telecom Equipment
• Auto Stereo Installation Products
• Spa and Salon Equipment

Distribution/Importer
• Aluminum Products

Engineering
• Environmental

Financial Services
• CPA Firms/Accounting
• Insurance
• Mortgage Brokers
• Third Party Administration

Manufacturer/Distribution
• Remanufacturing of Boats and Sports Engines
• Water Softener Equipment
• Jewelry
• Automotive Gears
• Chemicals
• Electrical Apparatus (Large Motors and General Remanufacturing)
• Replicas and Collectibles

Manufacturing
• Cabinet Shops
• Hurricane Shutters
• Machine Shops
• Remanufacturing of X-ray and other Imaging Tubes
• Sheds and Garages

Medical Equipment
• Durable Medical Equipment Sales

Medical Practice
• General/Specialty Practices
• Laser Eye Center
• Home Health Care
• Medical Staffing/Placement Services
• Medi-Spa
• MRI/Diagnostic Services
• Optical Center

Retail
• Advertising Specialties
• Art Dealer
• Hobby Stores
• Interior Decoration
• Jewelry
• Liquor Store
• Quick Service Restaurants
• Restaurants
• Safe and Lock
• Scuba Equipment/Excursions
• Trophies and Awards
• Video Store

Services
• Accounting and CPA Practices
• Ambulance Services
• Car Wash
• Cell Tower Development/Management
• Computer Services and Networking
• Cooking Oil Recovery/Recycling
• Craters and Freighters (Franchise)
• Day Care
• Dive Center
• Dry Cleaning and Laundry
• Equipment Rental
• Fire Equipment Sales and Service
• Hair Salon
• Interior Design
• Landscaping Services
• Management Consulting
• Moving and Storage
• Printing Broker
• Staffing and Placement Services
• Tanning Salons
• Tower Service
• Virtual Office

Transportation Services
• Trucking

Veterinary Practice
• Small Animals

Wholesale
• Art Dealer
• Law Enforcement Equipment/Apparel

   

 

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