What are the uses of a business valuation?
A business valuation might be performed in order to comply with the goodwill impairment testing requirements of SFAS 142, in the establishment of an earn-out, non-compete or buy-sell agreement. Valuation's are often used in the securing of financing or additional capital, in merger and acquisition endeavors, in divestitures, to provide boards of directors with fairness opinions or solvency opinions, for estate planning and gift tax planning, fresh start accounting, for dissenting shareholders, for litigation support, and in dissolution of marriage.
What types of businesses benefit from business valuation?
Many businesses benefit from an up-to-date business valuation as the results may may allow the business to satisfy the requirements of a third party. Some of these third parties might be auditors, assessors, insurers, attorneys, lenders, the IRS, or others.
How long is a business valuation considered up-to-date?
Because of dynamic and fluctuating market conditions, which affect various businesses differently, no exact answer can be given to this question. Normally, updating a business valuation requires a total review of the original appraisal in order to re-examine each of the three approaches to value as well as the numerous inputs affecting value. The appraiser must also reassess the economic outlook in general as well as the economic outlook for the company's specific industry. The business valuation that was made during difficult economic times would more than likely be different than an appraisal that was made during prosperous times. For this reason, an up-to-date appraisal is always the best indicator of value.
As stated in ASC 805, Goodwill of a reporting unit shall be tested for impairment on an annual basis and between annual tests in certain circumstances.
In the context of valuation of minority or fractional ownership interests in FLP and LLC partnerships, does appraising family limited partnership interests differ from appraising a business?
Yes. Because the stock of many businesses are owned by individuals who form partnerships, the value of a majority or minority interest in the underlying partnership assets are affected. Among other variables that affect the partnerships value are: size of the interest being appraised, restrictions laid out in the family limited partnership or LLC operating agreement, the historical dividends paid (and expected future dividend paying capacity of the entity), the historical profitability of the partnership, the future outlook of the enterprise, the net asset value of the underlying assets, etc.
Cambridge Partners appraises fractional ownership interests and partnership interests for a variety of purposes, including: estate planning, gifting, divorce, FASB 141, for buy/sell agreements, joint venture contribution, SFAS 142 and SFAS 144, etc.
What industry segments has your firm served in the area of business valuation?
The professionals at Cambridge Partners have performed business and/or stock valuations for companies engaged in numerous industries, including, but not limited to: retail, food & drink, medical, automotive, consumer services, technology, energy, finance, rubber, transportation, chemical, pharmaceutical, insurance, finance and banking, professional services, entertainment and many others. The following illustrates valuations performed by our firm:
- 409(a) valuation of a national branded food products company owned by a private equity group
- Worthless stock deduction under Internal Revenue Code (IRC) Section 165(g)(3). The deduction represented an ordinary as opposed to capital loss for the U.S. corporate taxpayer
- Valuation of a specialty steel products business as part of an S-election
- Software company SFAS 142 business valuation for a reporting unit of a Forbes 100 Japanese company
- Invested capital business valuation of a Midwest based medical imaging (MRI) company as part of an acquisition
- Stock valuation of a New York based talent agency which represents well known classical artists, instrumentalists and orchestras
- Business valuations of several of the nation's largest branded food products companies
- Valuation of the common and preferred stock of a specialty chemicals company in Texas
- Common stock valuation of a Northern Europe domiciled metals business as part of a cross border tax strategy
- ASC 718 (formerly SFAS 123r) stock option valuation of an online gaming company
- Business valuations of numerous automobile racing facilities (see: auto racetrack valuations) across the country, including: NASCAR oval tracks, drag strips, road courses, test facilities, asphalt paved tracks and DIRT tracks
- Business valuation for a manufacturer of specialty power generators as part of its planning for potential sale
- Business valuation of a Hyderabad India specialty electronics manufacturer as part of its joint-venture with a U.S. Company
- Business valuation of a hi-growth pharmaceutical company for litigation support
- FASB 142 valuation to test for any goodwill impairment of a leading specialty products retailer