Complex and Constantly Changing Tax Laws Needn’t Threaten your Business
Like to have your cake and eat it too? Our valuation services reduce your compliance risk and ensure an optimal tax strategy is in place. We also collaborate with your tax CPA and attorney, so everyone stays in the loop. Knowing your organization utilizes tax law advantages that can withstand any IRS scrutiny and has a partner ready to defend their work allows you to focus on what really matters—your customers.
An IRS-qualified business appraisal is critical in many situations, including:
- Stock-Based Compensation (IRC Sec. 409a – Stock issuances, Stock Options, Warrants, SARs, Phantom Stock or Profits Interests, aka Synthetic Equity)
- Estate & Gift Tax Planning for Estate Tax Freezing Techniques Involving Trusts, such as SLATs, BDITs, GRATs, etc.
- Charitable Contribution Planning, like Donating Shares to Donor Advised Funds or Charitable Trusts
- Built-in Gain Analysis/Entity Conversion
- Cost Basis Establishment Upon Death
A Valuation that Traveled Through Time (Without a DeLorean!)
A manufacturing business owner came to us seeking help valuing his business. Here’s where it gets unusual—we weren’t tasked with determining the company’s current value and/or roadmap for the future…we had to figure out the company’s value—in the past.
The current owner inherited the company from his father who passed away years prior. The son was passionate about this business, viewing its success as a testament to his family. Over the years, he built it up to a level his father had never achieved.
But then his CPA called with a question even he couldn’t answer.
The son’s accountant asked him for his cost basis to determine long-term capital gains. He had no answer, but a friend referred him to Sofer® Advisors.
The son knew that the cost basis was the value of the business on the day his father died, so it was a matter of “traveling through time” to indicate where the business was—eight years ago.
Although we don’t have a time-traveling DeLorean like Marty McFly in Back to the Future, we do have a talented team of valuation experts who quickly established a defensible valuation of the business at the time the son took over.
The result? The client and the CPA received the valuation they needed to report a cost basis to the IRS to maximize capital gains—and avoid possible fines and penalties on missed taxes.
FAQ
Is Business Valuation a formal process?
It is indeed. We examine every aspect of your company to assess its value. This provides credible, transparent results that lenders, investors, potential buyers, and other stakeholders can trust.
How long does a Business Valuation take?
Every business is unique, and so is every valuation process. On average , a formal valuation takes four to eight weeks, depending on your company size and how long it takes to provide company background, documents, and other requested information.
If you need your valuation on a tight deadline (i.e., for an upcoming merger or acquisition transaction, court proceeding, or a tax or audit deadline), we can expedite for a fee. Conversely, if you have the flexibility to slow down the valuation process, it can potentially reduce costs.
At the start of our process, we’ll offer a comprehensive list of all needed documents, working closely with you to define the timeline upfront.
How often should a valuation be performed?
Your company’s value changes daily—just like the big public companies on Fox Business and CNBC. By performing periodic valuations, you can better track how your decisions affect your valuation, informing future risks and opportunities. Best practice is to perform a valuation on at least an annual basis.
Also, a valuation should always be performed ahead of a sale, merger, acquisition, shareholder conflict, or any major strategic decision so all parties can operate on the same objective set of facts.
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