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 and Gift Tax Valuations – S-Corporation Elections
Valley Valuations provides professional reporting of the fair-market value of closely-held entities such as corporations, family limited partnerships (FLPs), general and limited partnerships and LLCs for gifts, estate tax, charitable donations, C-Corp to S-Corp conversions (valuation of goodwill, built-in-gains tax on balance sheet assets), and other tax reporting purposes. We value minority and majority interests in operating companies, and family limited partnerships using appropriate discounts where allowed for marketability and control attributes.
A business appraisal is often required to determine the value of a deceased business owners interest in a closely held small business. The estate tax return, form 706, is due nine months from the date of death. Business owners who gift shares in their businesses must determine value as of the date of the gift for tax reporting to be used on federal form 709. Gift tax returns are generally due on April 15th following the year in which a gift is made unless extended to a further date.
Estate planning for high net-worth individuals begins with an estate valuation project. We can help to advise CPA’s and attorneys with establishing a baseline value for planning purposes. The estate planning exemptions are a moving target, changed at a whim by Congress, and knowing where the business value falls is helpful in planning for gifting and/or insurance needs. Knowing the value of your business is essential to tax planning and the preservation of family wealth.
A valuation is needed when an existing C-corporation converts to a subchapter S-corporation for tax filing purposes. There can be many reasons for the conversions, but most are driven by the tax efficiencies of the S-Corporation and its shareholders. The valuation establishes a tax basis for the corporate assets at the time of the S-election which can be made almost anytime. The tax basis is important because a sale of corporate assets within 5 years after conversion may be subject to built-in gains tax at the corporate level tax rate. 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 assist businesses and their advisors in this calculation.
Valley Valuations’ qualified appraisers are licensed CPAs and credentialed business valuators satisfying IRS requirements. Reports submitted to the IRS for tax reporting purposes must be from qualified, credentialed valuation professionals – a high bar not met by many financial advisors including CPAs; there must be additional focus and credentials from an accredited organization such as the National Association of Certified Valuation Analysts. Our qualified appraisals comply with Revenue Ruling 59-60, USPAP, NACVA, and IRS valuation guidelines.
Mergers and Acquisitions (M&A)
Many businesses and professional advisors involved in merger and acquisition projects come to Valley Valuations for objective and independent value assessments, as well as advice on deal transaction structuring, negotiations, and deal due diligence. Every business and its owners want to know the value range of their business, and they want to know it early on in the process, if necessary. What will the business sell for in the market place and what expectations should be set before getting too far in discussions with either the owners, family members, or potential buyer candidates? Smart businesses will investigate this early on in the process by requesting an M&A valuation assessment of value.
For buyers of businesses, the purchase price can have such a significant effect on an acquiring company’s future returns and shareholder value, management and boards should involve a valuation expert early in the acquisition process, before deal terms are discussed and submitted, so they don’t over commit or get carried away with enthusiasm.
Companies and their shareholders come to Valley Valuations for independent third-party business appraisals when a shareholder/partner passes away, retires or otherwise leaves the business. Often, shareholder agreement stipulate how and when a business valuation must be performed in these instances. We also provide valuation services when buy-sell agreements are being drafted or there is a need for a baseline value. We frequently consult with drafting attorneys on the process, method, and options available for valuations when a triggering event occurs. It can be smart planning to choose and commit to a methodology to be used between the parties before such need arises. This will lead to less consternation and disagreements.
Most buy-sell or shareholder agreements stipulate that the share price or partner interest be based on an independent third-party valuation. Without agreement on how shares will be valued ahead of the triggering event, shareholders or partners often find themselves negotiating price with former friends or family members of the deceased.
The advisors at Valley Valuations can consult with the business owners and their attorney on the correct components and methodology to use specific to the business and industry.
Exit Planning and the Succession Plan
Having an Exit Planning Map can determine whether you will have a successful exit of your business. You’ve worked years or even decades on your business. Put time and energy into planning your exit. We can help with bringing focus to your plan and discuss the many components and milestones to meet along the way leading to a rewarding exit for all the stakeholders. Ask us about how we can create and share our Exit Plan Map with you.
Business Acquisition Financing
Valley Valuations is a qualified source for business valuations for SBA 7(a) loans for business acquisitions. According to SBA Standard Operating Procedure, all business acquisition loans over $350,000 or whenever a buyer and seller have a close relationship, the lender must obtain an independent third-party business valuation from a qualified valuation professional. “Close relationships” include transactions between employer and employee, family members, co-owners, among others.
Other Potential Uses for Our Valuation Services
- Goodwill impairment – GAAP Purposes
- Purchase Price Allocation for transaction agreements
- Corporate restructuring and re-orgs
- Fair value for financial reporting – GAAP Purposes
- Fairness opinions
- Stock options and incentive compensation arrangements (409A)
- Economic damages litigation
- Intellectual property (IP) and intangible asset valuations