Small business acquisition consulting
Business valuation assistance with respect to estate tax, gift tax and other issues
Why are values so different?
Business valuation results are very dependent on what type of value is determined, and the independence in mind and practice of the actual valuator. Gift and estate valuations use something referred to as the fair market value (described in Revenue Ruling 59-60), while divorce and other valuations use different measures of value, often referred to as fair value. When using the term "fair value" it is important to understand what definition of fair value is being referred to. Marital fair value is defined differently in different states, and in/for different types of courts. Fair value for shareholder disputes is defined differently depending on the argument(s) being made in court. Your business valuator works with your attorney and accountant/tax preparer to identify the correct measure of value (fair value, fair market value, etc. [there are many others]). Then the valuator must remove any desire to reach a value which would be in the favor of you the client (high, or low), and be neutral; developing the value that reflects the correct (and impartisal) measure of value. The effective valuation date and time also impact the result as businesses often have good years, bad years, good press and bad press, all of which may impact value.