Business Valuation
Tax & Financial Solutions, Inc.
offers valuation services for those who wish to have a better understanding of what
their business is worth. (Wish to improve your business value? See
Business Consulting.)
Tax & Financial Solutions, Inc.
provides valuation of business enterprises that can be used for a variety of reasons:
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You may wish to
simply understand the value of your asset or wish to establish a business value
for purposes of obtaining financing |
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You may be thinking
of buying or selling |
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You may be
considering establishing an Employee Stock Option Plan (ESOP) |
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You may own a
corporation and are in the process of preparing an estate and/or gifting plan.
We can provide the necessary valuation, confident that the valuation can be
supported should the IRS decide to audit your tax return |
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You may be in the
marketplace for obtaining financing and need to establish a value for collateral
purposes |
When valuing a business, knowledgeable appraisers follow some time proven guidelines
Chief among them is definitions worked out over the years in successive court cases,
written in textbooks and those that have been recognized by the Internal Revenue
Service and the business marketplace.
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Fair Market
Value. Fair market value is the standard we use in valuing a business
and is the legal standard for federal gift, estate, charitable and Employee
Stock Ownership Plans ("ESOP") tax valuation requirements, as well as for many
other legally mandated valuation issues. More appraisers value businesses
using this standard than under any other. As such, business owners and
their advisors should have a good understanding of the valuation implications of
this standard. |
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Definition of
Fair Market Value. The definition of fair market value is known as a
"willing buyer and willing seller" concept, reflecting the well-established
meaning of fair market value as presented in Revenue Ruling 59-60. |
Revenue Ruling 59-60 provides a working definition of fair market value:
2.2 Section 20.2031-1(b) of the Estate Tax Regulations (section 81.10 of the
Estate Tax Regulations 105) and section 25.2512-1 of the Gift Tax Regulations
(section 86.19 of Gift Tax Regulations 108) define fair market value, in effect, as
the price at which the property would change hands between a willing buyer and a
willing seller when the former is not under any compulsion to buy and the latter is
not under any compulsion to sell, both parties having reasonable knowledge of the
relevant facts. Court decisions frequently state in addition that the
hypothetical buyer and seller are assumed to be able, as well as willing, to trade
and to be well informed about the property and concerning the market for such
property.
Also to be considered are eight factors set forth in a fair market value
determination (Revenue Ruling 59-60) i.e., the nature of the business and the
history of the enterprise from its inception, the economic outlook in general and
the condition and outlook of the specific industry in particular, the book value of
the stock and the financial condition of the business, the earning capacity of the
company, the dividend-paying capacity, whether or not the enterprise has goodwill
or other intangible value, sales of the stock and the size of the block of stock to
be valued, the market price of stocks of corporations engaged in the same or similar
line of business having their stocks actively traded in a free and open market,
either on an exchange or over-the-counter.
As a firm that has worked with hundreds of business over our 23-year history,
Tax & Financial Solutions, Inc.
understands the value of working with other professionals such as your attorney,
real estate broker or engineer in valuing your company.
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