Understanding Business Valuations From Purpose to Product

• Overview

Understand when to have a business valuation performed and what professional standards apply to these engagements.Often times, business owners need to know the value of their business or interests therein. Whether it is for succession or exit planning purposes, a measure of economic damages, or for income, estate, gift tax purposes, knowing the value of the asset is critical to proper planning. This topic will help the persons advising business owners identify when it is appropriate to have a business valuation performed and what professional standards apply to these engagements. By understanding the different standards of value and valuation approaches, advisors can assist business owners in making critical decisions as well as making sure they are compliant with federal income, estate, and gift tax rules. These advisors will also be able to understand business valuation reports and schedules and provide meaningful input into the planning and compliance processes.

Authors

John T. Alfonsi, CPA/ABV/CFF, CFE, CVA, MST, Cendrowski Corporate Advisors

Agenda

Reasons for a Business Valuation

• Estate and Gift Tax Planning and Compliance

• Merger and Acquisition

• Buy-Sell Agreements

• Litigation

• Valuation vs. Calculation Engagements

Understanding the Business Valuation Process

• Appropriate Standard of Value

• Various Valuation Approaches

• Application of Discounts/Premiums

Income Approach

• Forecasting Future Economic Income

• Estimating a Discount Rate

• Discounted Cash Flow vs. Capitalized Cash Flow

Market and Asset Approach

• Guideline Publicly Company

• Guideline Transactions

• Adjusting Historical Assets to Applicable Value

Discounts and Premiums

• Discount for Lack of Control

• Discount for Lack of Marketability

• Others