Are you trying to get financing for your business? Do you want to sell your business? Do you need life insurance to cover your business and family after your death? Are you going through a divorce? If you’re a business owner in any of these scenarios, you’ll likely need a professional valuation of your business. In fact, there are numerous situations that could require a valuation. In those instances, it’s invaluable to have a trusted, experienced and knowledgeable business appraiser who can do the job.
Valuating a business is part science, part art. There are multiple methods for determining a valuation. There is also a wide range of input variables. Arriving at a valuation often depends on subjective decisions and assumptions about the information that’s used in the calculation.
Our team of business valuation experts starts the valuation process by gaining a full understanding of your business and its unique strengths and risks. This helps us better determine which valuation methods are most appropriate and which variables we should use.
We try to provide ranges of values that can help to inform your decision making. We tell you what your business may be worth in both better- and worse-than-expected scenarios. That can help guide your planning.
Here is a sampling of some of the situations in which we frequently provide valuations:
A buy-sell agreement is an effective way to protect your family and your business in the event that you pass away. You identify a successor, perhaps a business partner or a key employee. The partner buys life insurance on you and agrees to use the proceeds to compensate your family for your share of the business after your death.
There’s only one catch – the life insurance needs to be sufficient to cover your business’s value. That means that you’ll need a valuation to determine what the business is worth today and what it may be worth in the future. We can give both parties a valuation range that can guide the insurance buying decision.
We can also project how future growth may affect the business’s value, so that you can adjust the insurance and agreement over time.
Mergers & Acquisitions
In an M&A situation, valuation and pricing arecritical. It may drive the deal. On the buying side, you obviously want to see a low valuation for the target company. On the selling side, you want a high valuation. We look for the accurate valuation and then provide justification for that valuation so you can negotiate the deal from an informed position.
If you’re involved in a divorce and a closely-held business is a part of the marital assets, a business valuation is a critical piece of the puzzle. The business is probably one of the largest marital assets. We dig through business records, financial statements and transaction documents to get a full understanding of how the business operates. We utilize several acceptable valuation methodologies to come up with a range of values. We also attempt to place a value on each spouse’s contributions to the growth of the business. Regardless of what side of the divorce you’re on, unbiased and fact-based findings can help you better negotiate a settlement or present your case in court.
Estate Tax Planning
If you own a closely held business, it’s very possible that estate taxes could be a legitimate concern for you. Even though estate tax exemptions have increased in recent years, they are still low enough that they may not cover the full value of a successful business.
If you don’t plan properly, your family may face a hefty tax bill after you pass away. It’s not uncommon for families to have to sell a business to get enough liquidity to pay the tax bill. Fortunately, proper planning can help to avoid that scenario.
To implement any estate planning strategy, you’ll need to know the value of your business for tax purposes. Our business valuation experts can give you an accurate valuation range. They can then use that valuation to recommend the best estate planning solutions for you.
Bankruptcy may not be the ideal outcome, but sometimes it’s the best solution. When you go through bankruptcy, you not only have to document your liabilities, but you also have to document your assets. If you own a business, it may be difficult to estimate your business’s value. We help you determine the value so you can submit your filing with accurate and fact-based information.
At Smolin Lupin, we’ve been helping businesses operate and manage their taxes for more than 60 years. We provide a wide range of tax planning services, along with all of the strategic consultation needed to make informed decisions. We don’t look at business valuation as an end result, but rather a step toward sound decision-making. We welcome an opportunity to consult with you on your business valuation needs.