Will it ever be the same again?

The beginning to 2020 has been interesting so far. We went from the highest reported DOW Jones average in February, to a 30 percent drop in market value a month later.  But what does that mean for values of privately held companies? Don’t miss: Business valuation during a pandemic To answer that question, we must …

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Business valuation during a pandemic

One of the first things we must understand is the effect of the valuation date on a valuation. A valuation is performed as of a date in time. That date is often determined by the circumstances which have led to the need for a valuation. For instance, a valuation for estate tax filing is the …

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Gifting as part of your succession plan

You have built your small business on your hard work and sweat. You may even have your son/daughter/niece/nephew or other family members working with you in the company. Now you are ready to move on, or at least slow down. Often times a small business owner thinks how natural and easy it would be to …

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Tax implications of stock vs. asset sale

As professional tax advisers we are often asked to comment on the tax implications our clients will face if their business is sold. From an income tax perspective, the buyer and seller are typically faced with structuring the deal as a stock sale versus an asset sale. These two strategies can result in significant tax …

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Update on transaction multiples

You have probably heard valuation multiples being tossed around by owners and others regarding the value of businesses. The typical multiple referenced is a multiple of EBITDA which is defined as “Earnings Before Interest, Taxes, Depreciation and Amortization.” Owners sometimes overestimate the value of their business. Recent market data can be very instructive but must …

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Valuing your business: the impact of company specific risk

When valuing a business using an income approach, a valuation analyst will develop a discount rate or capitalization rate to apply to the expected ongoing income or cash flows of the Company. The discount or capitalization rate (cost of capital) is essentially a rate of return expected by the potential buyer for the investment in …

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Governing agreements and holding company valuation

One of the first items we ask for when engaged to value a holding company interest is the governing agreement of that entity. This could be either an Operating or Partnership Agreement (with all amendments). Sometimes we are asked why we need the governing agreement to prepare a valuation. In the valuation of holding company …

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ASA supports trustee, appraiser in ESOP litigation

I recently wrote an article about several cases being brought by the Department of Labor (DOL) against Employee Stock Ownership Plan (ESOP) trustees. The cases all related to the DOL’s claim that the ESOP trustees had breached their fiduciary duties by relying on appraisals prepared for the valuation of the ESOP owned stock. One such …

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Tax reform and valuation, the big picture

We saw large increases in the value of public companies during 2017 in anticipation of the new administration’s proposals to reduce federal regulations, promote growth policies and push for tax reduction. The Dow Jones Industrial Average and the NASDAQ both increased just over 20% during 2017 and the S&P 500 index increased by almost 16% …

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Subsequent events in the world of business valuation

The valuation of a business is prepared as of a certain date in time. This could be any date, often determined by the purpose of the valuation. A valuation prepared for estate tax purposes is as of the date of death. A valuation for divorce purposes is often the date of service. The valuation date …

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