Valuation
Business valuations that support transactions, lending, tax filings, ownership agreements, and financial reporting, prepared with the documentation each purpose requires.
Overview
A valuation is only useful if it holds up for the purpose it was prepared for. A buyer negotiating price, a lender underwriting an acquisition loan, the IRS reviewing a gift tax return, and an auditor testing a purchase price allocation all look for different things. Pease Bell prepares business valuations with the intended use in mind, applying income, market, and asset approaches as appropriate and documenting the assumptions behind each conclusion so the work can be followed and supported.
Our valuation work draws on the firm’s audit, tax, and transaction teams. That matters when a valuation depends on normalized earnings, tax attributes, or the accounting that will follow a deal. We help owners, investors, lenders, and their advisors understand not just what a business is worth, but which factors drive that value and how sensitive the conclusion is to changes in them.
Valuation Services We Provide
Transaction Valuations
We help buyers and sellers assess the value of a business or ownership interest ahead of an acquisition, sale, merger, or recapitalization, including analysis of the earnings and risks behind price.
SBA Loan Valuations
We prepare business valuation analyses in connection with SBA 7(a) acquisition financing, coordinating with lenders on scope, timing, and documentation so the work fits the loan file.
Gift and Estate Tax
We value closely held business interests for gifting, estate planning, and estate tax reporting, including analysis of discounts for lack of control and lack of marketability where applicable.
Buy-Sell Agreements
We value ownership interests under buy-sell and shareholder agreements for buyouts, retirements, disputes, and periodic updates, applying the standard of value and terms the agreement defines.
Purchase Price Allocation
We help acquirers allocate purchase price to identifiable intangible assets, such as customer relationships, trade names, and technology, and to goodwill for business combinations accounted for under ASC 805.
Goodwill Impairment Support
We help companies estimate the fair value of reporting units and intangible assets used in goodwill and intangible impairment testing under ASC 350, with documentation auditors can review.
Valuation Questions We Help You Answer
- ✓Agreeing on a fair price when buyer and seller see value differently
- ✓Supporting discounts on transferred interests for gift and estate tax purposes
- ✓Buy-sell agreements with outdated formulas or unclear standards of value
- ✓Allocating purchase price to intangibles after an acquisition closes
- ✓Meeting lender documentation expectations on acquisition financing
Frequently Asked Questions
What methods are used to value a business?
Business valuations generally rely on three approaches. The income approach values expected future cash flows or earnings. The market approach compares the business to sales of similar companies or publicly traded peers. The asset approach looks at the value of underlying assets less liabilities. The appraiser weighs the approaches based on the company’s characteristics, available data, and the purpose of the valuation.
Why does the purpose of a valuation matter?
Different uses call for different standards of value and documentation. A gift or estate tax valuation typically uses fair market value as defined for federal tax purposes, financial reporting under ASC 805 uses fair value as defined in ASC 820, and a buy-sell agreement may define its own standard. Using the wrong standard can make a valuation unreliable for its intended purpose.
Do SBA acquisition loans require a business valuation?
Many SBA 7(a) change-of-ownership loans require an independent business valuation, and current SBA guidance sets requirements for who can prepare it and when a lender may value the business itself. Because those rules are updated periodically, borrowers should confirm the specific requirements for their loan with their lender early in the process.
What is a purchase price allocation?
A purchase price allocation assigns the price paid in a business combination to the assets acquired and liabilities assumed, measured at fair value under ASC 805. Identifiable intangible assets such as customer relationships, trade names, and technology are valued separately, and any remaining excess is recorded as goodwill. The allocation affects future amortization, impairment testing, and financial statement presentation.
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