Business Valuations

National Business Valuation Services, Inc. offers a wide range of business valuation services for a variety of purposes nationwide.  The following is an overview of the services offered:

MERGERS & ACQUISITION ADVISING SERVICES (Buying or selling a business or practice):

Buy-Sell Transactions help define the value for buying and selling of a business or professional practice.  They are beneficial in establishing value for a partial sale or purchase of an ownership interest.  Our valuations describe, when requested, the anticipated transaction deal terms (e.g. normal down payment, seller financing, contingent earn-outs, justified bank financing, and Justification of Purchases (JOP) in the current marketplace) that have the transaction experience and national network to provide this market-based, timely information.  We are one of the few valuation firms whose principal has actually sold/brokered businesses, i.e., who has had real-world transaction experiences, and who has a national network of business brokers to provide real-time, market-based due diligence.

 

ESTATE AND GIFT TAX:

We develop and support the appropriate level of discount metrics to help minimize or eliminate problems with the Internal Revenue Service.  NBVS complies with the Pension Protection Act of 2006 which imposed new requirements on individuals who provide appraisals for income tax (charitable donations) or transfer tax (estate or gift) purposes.  Appraisers must: have earned an appraisal designation from a recognized appraisal organization such as the American Society of Appraisers or the American Institute of CPA’s and 2) regularly perform and receive payment for appraisals; and 3) demonstrate verifiable education and experience in valuing the type of property appraised.

PARTNERSHIP AND CORPORATE DISSOLUTIONS:

It is often necessary to perform an appraisal to determine the “Fair Market Value” of an enterprise so that all parties can divide the tangible and intangibles, assets equitably.

BANK ACQUISITION FINANCING AND SBA LOANS:

Loans are dependent on the value of the ongoing enterprise’s income and  cash flow generating capacity as well as its identifiable tangible and intangible assets such as:

  • trademarks
  • trade names
  • service marks
  • Internet domain names
  • customer lists
  • customer contracts and related customer relationships
  • franchise and royalty agreements
  • advertising
  • supply and vendor contracts
  • lease agreements
  • books
  • magazines
  • advertising jingles
  • pictures & photographs
  • video and audiovisual material
  • patents
  • computer software
  • databases
  • trade secrets
  • secret formulas
  • other intellectual property

 

Most of the time, individual intangible assets are not specifically identified in the asset purchase agreement.  An independent business valuation and/or machinery & equipment appraisal is required for most SBA loan packages.   NBVS’s reports comply with the SBA’s Standard Operating Procedure (SOP) guidelines and the Uniform Standards of Professional Appraisal Practice (USPAP) requirements.

BUY-SELL AGREEMENTS/PARTNER BUYOUTS:

The Fair Market Value is established to avoid potential future problems for stockholders and partnership buyouts.  This valuation process can greatly simplify negotiations during the term of the operating or partnership agreement. A common issue is the definition of the standard of value as well as whether the value of the ownership interest should be stated without regard to discounts: is it on a pro-rata basis or after applying discounts for lack of control (minority discounts) and/or lack of marketability.

EXIT AND TRANSITION PLANNING:

Exit and transition planning is typically used when family-owned businesses wish to keep the business, to sell, and/or transfer their businesses/practices.  NBVS is the company you need as its founder and his team has been involved in thousands of real-world transactions.

EMPLOYEE STOCK OPTION PLANS (ESOP):

ESPO’s must be independently appraised annually to establish Fair Market Value for purchase price and or contributions.

INTANGIBLE ASSETS VALUATION FOR PURCHASE PRICE ALLOCATIONS:

For economic analysis and purchase price allocation purposes, it is often necessary to distinguish between tangible and identifiable intangible assets, as well as between real property and personal property assets.  These distinctions are important for a variety of accounting, legal, financial, and taxation reasons. A valuation report must be able to distinguish, value, and support the purchase price allocations to such identifiable intangible assets as:

  • Marketing-related intangible assets (trademarks, trade names, service marks, Internet domain names)
  • Customer-related intangible assets (customer lists, customer contracts, and related customer relationships)
  • Contract-related intangible assets (franchise and royalty agreements, advertising, supply and vendor contracts, lease agreements)
  • Artistic related intangible assets (books, magazines, advertising jingles, pictures & photographs, video, and audiovisual material)
  • Technology-related intangible assets (patents, computer software, databases, trade secrets, secret formulas, and other intellectual property
  • Earnouts for purchase price allocation’s and fair value of accounting

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FINANCIAL REPORTING (Intangible Assets and Goodwill):

Financial Accounting Standards Board (FASB), Standards Codification Topic 820, Fair Value Measurement, and International Accounting Standards Board, International Financial Reporting Standards 13, Fair Value Measurement.

PERSONAL GOODWILL IDENTIFICATION AND PARTITIONING

The Martin Ice Cream case, as well as other personal goodwill cases, support the fact that a seller’s personal goodwill is separate personal property that may be carved out, or partitioned, to the seller outside of the overall purchase price, as well as outside of the corporation (especially outside of C-corporations in order to avoid double taxation) – if the facts and circumstances support it.  A careful and considered valuation analysis is a must to justify and support a personal goodwill partitioning.  Whether you are involved in an asset sale or a stock purchase, partitioning the purchase price into personal goodwill as well as other identifiable intangible assets, may create tax parity between the buyers and sellers, creating tax benefits for both buyers and sellers (currently long term capital gain treatment for the seller and amortization by the buyer).  Identification and partitioning personal goodwill is also an important consideration when changing or converting legal organization types, i.e.: converting from a C-corporation to an S-corporation.  Besides personal goodwill, other identifiable intangible assets that are usually partitioned with personal goodwill are Workforce In-Place and Non-Competition Agreements.  We also value other identifiable intangible-related assets, such as Marketing, Customer, Contract, Artistic, and Technology.

FEASIBILITY STUDIES

Feasibility Studies are used to limit one’s losses.  It is a systematic study to understand if a business, venture, or project should be a “go” or “no go.”  The feasibility study can assist business owners and managers in understanding what aspects of a project or business are of greatest strategic value to the success of the venture.

FAIRNESS OPINIONS:

The fairness opinion is a black/white finding stating whether the deal or transaction as presented seems fair and justified.  Important items include basic due diligence, analysis of risk factors, deal structure, and/or potential conflicts.