Business Valuation and Litigation Support
Your Needs
Are you gifting to your children? Settling a legal dispute? Going through a divorce? Whatever the reason, Vrakas/Blum’s Business Valuation team can provide you with an objective analysis of the current worth of your business.
Examples of when an expertly established value is needed include:
- Divorce
- Estate and succession planning
- Buy/sell agreements
- Shareholder/partner disputes
- Litigation support
- ESOP transactions
- Shareholder financial planning
- Sale of a business
- Purchasing a business
- Intangible asset allocation/impairment testing
Experience Counts
Valuing a business is a complicated matter, and our professionals have developed the special expertise required to provide you with a supportable valuation. Everyone’s needs are different, so let us help you evaluate your unique situation and determine the level of service most appropriate for your particular need.
Our experience not only covers a wide array of valuation needs, but also covers a wide range of industries. In addition, our business valuation practice leaders have obtained one or more business valuation credentials from the National Association of Certified Valuation Analysts (CVA) or the American Institute of Certified Public Accountants (ABV). The CVA and ABV are elite accreditations for CPAs who, through extensive valuation training and continuing education, have the necessary background for providing business valuation services.
Divorce
In a divorce situation the business is often the most valuable asset in the marital estate. Whether you are the “in” spouse involved in the business or the “out” spouse, a valuation is an integral part of the divorce proceedings to ensure an equitable division of assets.
Estate and Succession Planning
Knowledge of the value of a business is crucial to effective estate/succession planning. Proper planning ensures the future distribution of the business assets has minimal tax consequences and prevents a liquidation of the company. Additionally, a supportable valuation is essential in establishing value for estate or gift tax purposes.
Buy/Sell Agreements
Proper planning and proper installation of a buy/sell agreement is essential for the future well-being of your business and your family. Our valuation team can work with you and your attorney to develop appropriate values and/or provisions for use in your buy/sell agreement.
Shareholder/Partner Disputes
In contentious situations, it can be beneficial to have a neutral third party help you determine the value of the business. A valuation team with solid valuation expertise can help assure you that the dispute is being settled fairly.
Litigation Support
A properly prepared business valuation can prove extremely helpful in legal disputes including the following situations:
- Divorce proceedings
- Shareholder/partner disputes
- Economic damages
- Liquidations
ESOP Transactions
Employee Stock Ownership Plans (ESOP) continue to be an alternative to selling a company to an outside party. An added benefit is the tax advantage to the current owners. However, if a company’s stock is not publicly traded the Department of Labor requires annual valuations to support the stock transactions that occur during the year.
Shareholder Financial Planning
When it comes to corporate planning, it is imperative for business owners to know the company’s value. This is especially important in the following situations:
- Establishing value for purchases and sales of stock
- Preventing shareholder disputes
- Determining appropriate levels of life insurance
Sale of a Business
Whether a business is to be sold to a relative, employee or an outside party, a range of value must be established to determine a fair selling price, as well as to take advantage of tax-free transactions.
Purchasing a Business
When purchasing a business, a thorough review of the financial history must be made to ensure conditions do not exist that would impact the viability of the company. However, a more important process is to determine the future earnings capacity of the business. A valuation can identify items that affect a company’s future earnings potential.
Intangible Asset Allocation/Impairment Testing
Accounting principles related to the treatment of intangible assets have changed. No longer are intangible assets amortized over a certain period, but instead are to be written off only if their value has been impaired. A valuation can identify the amount of intangible assets and if a company’s intangible assets have been impaired.
Valuation Levels of Service
There are three categories of valuation services to serve your business valuation needs. These include a formal valuation opinion, a preliminary indication of value and valuation consulting services. The nature of these three levels of service is described below.
Formal Valuation Opinion
To provide a conclusion of fair market value, we are required by our certifying organizations to perform a detailed analysis and study of the company, its industry and the markets in which it operates.
Both internal and external factors that influence the value of the company will be reviewed, analyzed and interpreted. Internal factors include, but are not limited to the company’s financial position, results of operations, and the size and marketability of the interest being valued. External factors include, but are not limited to the status of the industry and the position of the company relative to the industry.
To enable us to issue a formal valuation opinion we will analyze financial statements, financial information and other data obtained from management; visit the company; interview management; research the company’s industry, customers and competitors; search for guideline companies; and perform other procedures necessary and appropriate to render an opinion regarding the fair market value of the company. We will also prepare a written valuation report based on our analysis.
Preliminary Indication of Value
This type of engagement is generally substantially less exhaustive than the procedures necessary to issue a formal valuation opinion.
The extent of procedures to be performed will depend on your requirements. In addition, under your direction, a written report may or may not be prepared.
Our fee to prepare a preliminary indication of value is dependent on the extent of procedures to be performed and whether a report is to be prepared. For informational purposes, this type of consulting engagement generally consumes 40% to 60% of the fees for a formal valuation opinion.
Valuation Consulting Services
We are also available to consult on a variety of issues, including:
- Critique of existing valuation reports
- Evaluating whether it is cost beneficial to have a valuation performed
- Identification of key valuation issues
- Discussion of treatment of complex or sensitive valuation issues
- Trial strategy
- Preparation of trial exhibits
- Preparation of direct and cross-examination questions
- Settlement discussions
Certified Valuation Analyst (CVA)
The National Association of Certified Valuation Analysts (NACVA) certifies practitioners to perform business valuations as a service to both the practitioner community and the users of their services. Through training and rigorous testing, practitioners demonstrate they are qualified to provide capable and professionally executed valuation services. The NACVA requires training as a prerequisite to certification to ensure practitioners have the knowledge and understanding necessary to perform competent services, and to ensure a level of consistency and continuity in their work product. Users of valuation services benefit by having greater confidence that the service they receive is professional in quality, adheres to industry standards of practice, and meets a level of expertise that the NACVA deems credible and worthy of its certified members.
To expand its service to the industry, the NACVA seeks assurances from its certified members that they are staying current on matters and issues that lead to, and promote, quality in their work. To affect these assurances, the NACVA has periodic recertification options in place, which include:
- Participation in a Quality Enhancement program
- Attendance at the “Current Update in Valuations” course
- Taking Continuing Professional Education in business valuation, litigation support and areas related to these disciplines
- Authorship, course development and instructing
- Level of experience
Through compliance with recertification, certified members demonstrate their commitment to the business valuation discipline and keep themselves current on changes in the industry which might impact how they perform their services.
Accredited in Business Valuations (ABV)
The ABV is the business valuation credential granted by the American Institute of Certified Public Accountants (AICPA). To be eligible to apply for the ABV credential, a candidate must:
- Be a member in good standing of the AICPA
- Hold a valid and unrevoked CPA certificate or license issued by a legally constituted state authority
- Pass a comprehensive Business Valuation Examination
- Provide evidence of ten business valuation engagements that demonstrate substantial experience and competence
- Provide evidence of 75 hours of life long learning related to the business valuation body of knowledge
The ABV designation certifies that you are working with an accredited valuation professional—a CPA who brings added value to a valuation engagement. As a CPA/ABV, we combine a sophisticated understanding of accounting, taxation, financial statement analysis and business operations in many different industries with proven competence in valuation. Building on our core competencies, the ABV gives us an advantage in meeting your valuation needs.
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