Valley Valuations provides independent business valuations. We serve Central California and beyond with business appraisal and valuation services. Located in Fresno, California, we know the Ag business and associated industries like no one else. We have performed business valuations in dozens of states for hundreds of companies. Our experience is second to none. Our valuation analysis and reports are used for the following purposes:
- Estate, gift tax purposes
- Marital dissolutions – valuation of marital business
- Mergers and acquisitions
- Shareholder buy-sell transactions. Family transactions
- Employee buy-outs
- Exit and Succession Planning services
- S-Corporation Elections. Built-in-Gains calculations
Estate, Gift and S-Corporation Election Valuations
Valley Valuations provides fair market value appraisals of closely-held corporations, Family Limited Partnerships (FLPs), partnerships and LLCs for gifts, estate tax, charitable donations, C to S Corp conversions (valuation of goodwill, built-in-gains tax) and other tax purposes. We value fractional interests in operating companies, and family limited partnerships using appropriate discounts.
The IRS requires that a qualified business appraisal be performed by a qualified appraiser. Valley Valuations’ qualified appraisers satisfy the IRS requirements, and are prepared to defend their work in the unlikely event of an audit. Our qualified appraisals comply with Revenue Ruling 59-60, USPAP and IRS valuation guidelines. An independent valuation by a qualified appraiser is your best defense against an IRS challenge.
A business appraisal is required to determine the value of a decedent’s interest in a closely held business. Generally, the estate tax return is due nine months after the date of death. Business owners who gift shares in their businesses must determine value as of the date of gift. Gift tax returns are generally due on April 15th following the year in which a gift is made.
Accurate asset valuations are essential to estate planning and wealth preservation. For estates involving private businesses, a valuation is often the starting point for estate planning professionals as they consider various estate planning techniques to benefit the owner-taxpayer.
A valuation is needed when an existing C corporation converts to a subchapter S corporation. The valuation establishes a tax basis for the corporate assets at the time of the S election. The tax basis is important because a sale of corporate assets within 5 years after conversion may be subject to built-in gains tax. Built-in gain is the amount by which the fair market value of an asset exceeds its adjusted tax basis as of the conversion date. We can determine this potential tax.
Merger and Acquisition Transactions
Parties involved in merger and acquisition discussions come to Valley Valuations for objective and independent value opinions, as well as advice on transaction structuring and negotiations. In every M&A deal, one of the first, most important and most difficult questions to settle is, “how much is it worth?” Sellers need to know what price their business would likely command in the marketplace. Buyers need help understanding the investment value of a potential acquisition. Because purchase price can have such a significant effect on an acquiring company’s future returns and shareholder value, management should involve a valuation expert early in the acquisition process, before price and terms are cast.
Most buy-sell or shareholder agreements stipulate that the share price be based on an independent valuation. Without agreement on how shares will be valued, shareholders often find themselves negotiating price with former friends, their families or estates, after the interests of the parties have diverged. Such negotiations are difficult, fraught with conflict and uncertainty, and often lead to litigation.
Companies and shareholders come to Valley Valuations for independent business appraisals when a shareholder retires, is fired, quits, passes away, becomes incapacitated, withdraws, or some other trigger event occurs. We also provide valuation services when buy-sell agreements are being created or updated, and periodically during the life of a business as shares are bought and sold, for buy-sell funding, for business planning, and for succession planning.
Exit Planning and the Succession Plan
Whether you intend to transfer your business to family, management or a third party, a proactive exit plan is important to a successful outcome. Exit Planning and Succession Planning often begins with having a qualified independent expert provide a baseline business valuation.
Business Acquisition Financing
Valley Valuations is a qualified source for business valuations for SBA 7(a) loans for business acquisitions (change of ownership). According to SBA Standard Operating Procedure 50-10-5(c), paragraph (i), for all business acquisition loans over $350,000 or whenever a buyer and seller have a close relationship, the lender must obtain an independent business valuation from a qualified source. Examples of “close relationships” include transactions between employer-employee, family members, co-owners, and parties with an existing, non-arms-length relationship.
Additional Uses for Our Valuation Studies
- Allocation of purchase price for purchase transaction
- Bankruptcy, solvency, restructuring
- Corporate restructuring
- Economic damages litigation
- Fair value for financial reporting
- Fairness opinions
- Goodwill impairment
- Stock options and incentive compensation arrangements (409A)
- Intellectual property (IP) and intangible asset valuations
- Trusts, Estates and Family Limited Partnerships (FLPs)