Valuation

Business Valuation

What We Do

Smith and Gesteland’s experienced business valuation professionals provide high-quality valuation and consulting services to people and firms:

  • That are involved in a buyout, partnership dispute, estate or gift tax issue, or divorce proceeding. 
  • That need assistance with financial reporting, such as purchase price allocation, impairment testing or marking fractional interest investments to market.
  • That have a need for intangible asset valuation for licensing, lending, or transaction purposes.
  • That are engaged in long-term business planning looking to maximize future value.
  • That are currently in the process of exit planning.
  • That are seeking financing/support for lender decision-making.

Who We Help

Smith & Gesteland’s business valuation professionals have provided valuation services to firms that range in size from the smallest sole proprietorship to multi-million dollar multinational firms, and companies in every life cycle stage, from start-up to mature, and to individuals with ownership interests in those firms. We have the experience to assist you, no matter what size or stage your business.

What We Value

  • Equity (100% and Fractional)
  • Business Enterprise/Invested Capital
  • Intangible Assets

Purpose for Business Valuation Engagements

  • Estate and Gifting
  • Divorce
  • Litigation Support
  • Lender Support
  • Financial Reporting
  • Intangible Asset/Intellectual Property Valuation
  • Business Planning

Trigger Events for Business Valuation Engagements

  • Estate and Gifting
    • Transfer of business ownership
    • Death of business owner
  • Divorce
    • A party in the divorce holds an equity position in a closely-held company or owns intellectual property.

Litigation Support

  • Dispute between owners of closely-held company
  • Misrepresentation or fraud in previous transaction

Lender Support

  • Some SBA loans (loans under the 7a program) require business valuations if a set of criteria have been met:
    • Debt refinancing used to finance a change in ownership
    • Any other change in ownership
    • Buyer and seller closely related
    • Total amount financed is more than $250,000 over the appraised value of real estate and/or equipment
  • Valuations of intangible assets that are being used as collateral
    • Contracts and patents are the most typical
  • Cash flow lending – validation/verification of business value/ability to meet loan requirements

Financial Reporting

  • Purchase Price Allocation (ASC 805)
    • Purchase of a company generally has to be a material impact on the financial statements of the company to warrant a purchase price allocation
  • Impairment testing (ASC 350)
    • Past purchase of a company, goodwill or indefinite-lived assets on balance sheet.

Mark-to-Market

  • Investment in another company e.g., minority interest in another company
    • Requirement to mark investments to market
      • Periodic review
      • Providing transparency for investors
  • Fresh Start Accounting
    • Emergence from bankruptcy often requires a process akin to a purchase price allocation.
  • Share-based payments for employee compensation: employee stock option valuations (ASC 718)

Intangible Asset/Intellectual Property Valuation

  • Monetizing assets
    • Use as collateral
    • License to third-party
  • Contemplating sale of asset and looking to price it
  • Contemplating purchase of asset and trying to determine if price is fair

Business Planning

  • Strategic planning: company looking to make business decisions and wanting to determine impact of decisions
    • E.g., what if we add a new line, close down plant, purchase that company
  • Succession planning
  • Exit planning – how to maximize company value so when it is marketed the company gets the best possible price
  • Expanding into a new industry

For more information, contact Bill Pellino at 608-836-7500 or at bill.pellino@sgcpa.com.

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