Non-litigation
Valuation and advisory work for filings, transactions, and ownership transitions
The same analytical discipline that holds up under cross-examination is what a tax filing, a transaction, or a buy-sell agreement requires — often years before anyone contemplates a dispute. What changes is the question being asked. A gift or estate filing asks for fair market value under IRS standards. A shareholder buyout may ask for fair value under a governing agreement or state statute. A transaction asks what a specific buyer should pay. The methodology overlaps; the standard of value, the audience, and the required documentation do not.
We scope the engagement to the purpose. A calculation engagement is faster and less expensive than a full valuation engagement, and for some purposes it is entirely adequate. For others it will not withstand review by the IRS, an auditor, or opposing counsel. We tell you which one your situation calls for, and why, before the engagement letter goes out.
Estate, gift, and other tax valuations
- Estate and gift tax
- Whether an operating company or a holding company, we prepare reporting-quality reports documented at the level an examination requires.
- Adequate disclosure
- Unless the return contains what the regulations require, a gift may not be adequately disclosed and the limitations period may not begin to run. We prepare reports with that standard in mind and identify what the return needs alongside them.
- Section 409A
- Common stock valuations supporting the exercise price of options and other equity compensation in privately held companies. Under the Section 409A regulations, a valuation prepared by a qualified independent appraiser within the preceding twelve months, absent an intervening material event, may be presumed reasonable, and the presumption is one the IRS can overcome only on a showing that the valuation was grossly unreasonable. That is the practical reason to refresh on a schedule rather than when a financing or an audit forces it.
- Charitable contributions
- Appraisals of closely held business interests contributed to charity, prepared to meet the qualified appraisal and qualified appraiser requirements.
- Other tax matters
- Entity conversions, basis and purchase price allocation, S corporation built-in gain questions, and reasonable compensation analyses.
We also work with counsel and the return preparer on examination, where a valuation already filed is being challenged.
Ownership transition and plan administration
- Employee stock ownership plans
- Feasibility and formation valuations, and the annual valuations plan administration requires, prepared to address the adequate consideration requirement.
- Buy-sell agreements
- Pricing at formation and on a recurring basis, and review of existing agreements. Most buy-sell disputes we see in litigation trace to an agreement that named a standard of value loosely, fixed a formula that stopped reflecting the business, or said nothing about who appraises and how disagreement is resolved. All three are cheap to fix in advance and expensive to fix later.
- Key-person insurance
- Valuation supporting the amount of coverage needed to fund a transition.
- Exit and succession planning
- What the business is worth now, what drives that number, and what a realistic transition looks like on the owner’s timeline.
Mergers, acquisitions, and consulting
We advise on both sides of middle-market transactions. On the buy side, we consult on valuations and assist with the diligence questions that determine whether the reported earnings are the earnings you are buying. On the sell side, preparation and pricing, and an honest read on what the business will support before it goes to market.
Deal mechanics are where the value moves after the price is agreed, and where the disputes we later get retained on originate: the working capital peg and how it is calculated, earn-out definitions and who controls the inputs, the treatment of debt-like items, and the accounting basis on which post-closing adjustments will be measured. We work through those with counsel while they are still drafting.
Other consulting engagements include financial modeling and forecasting, transaction-level data analysis, internal investigations outside a litigation posture, and fraud risk assessment for closely held companies that have outgrown the controls they started with.
What you receive, and what it should cost
Depending on the purpose we produce a conclusion of value in a detailed or summary report, a calculation of value, or an oral report where a number is needed to make a decision rather than to support a filing. For tax and plan work the report has to be able to stand on its own in front of an examiner, which sets the level of documentation. For a transaction or a planning conversation, it usually does not, and we will say so rather than sell you the longer document.