Business valuations serve many purposes. Valuations are often conducted to support business planning, accompany estate and gift tax reporting, assist in marital dissolution, determine share value for Employee Stock Ownership Plans (ESOPs), facilitate exit planning and value acceleration, and to aide in negotiation of the sale of the business. But not all valuations are created equal. The type of valuation engagement you need depends on its intended purpose. Knowing the difference can help your company use its resources wisely.
Full Valuation
In a full valuation, we consider the three valuation approaches (income, market, and asset) and express our opinion of the business’s value. Because third parties typically use these reports, the reports are generally long and detailed and include full descriptions of the business and our valuation procedures.
Choose a full valuation engagement when an official report is needed, such as for an ESOP, gift or estate tax return, or a court filing.
Calculation of Value
In a calculation of value, we discuss the extent and use of specific valuation approaches and methods to apply in arriving at a calculated value with the company’s management. Because of the limited approach, we don’t express our opinion on the value. Calculation reports typically aren’t appropriate for third-party reporting. Because of those limitations, a calculation report is usually much shorter than a full valuation report.
Choose a calculation of value for management planning purposes. A calculation of value provides the owners/managers with a good estimate of the business’s value but doesn’t entail as much cost as a full valuation.
Next Steps
Members of the Hantzmon Wiebel valuation team are specially credentialed in the valuation arena by the AICPA, reflecting their professional competence. Our training is enhanced by transactional experience, industry knowledge, and insight into the tax implications of deals, divorces, and disputes.
Contact our valuation professionals today, and we will help you determine which level of service is appropriate for your needs based on the purpose of the valuation.
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