Anacapa Valuations values both:
- operating businesses with revenue of $100 million or less,
- holding companies with assets of $200 million or less.
We do not appraise real estate, equipment, personal property, art, or collectibles. When needed, our firm teams with other professionals, such as real estate appraisers, equipment or personal property appraisers, industry specialists, engineers, geologists (for oil reserves), compensation specialists or forensic accountants to establish defensible business values.
Gift and Estate Tax Valuations
Business valuations for gift and estate tax returns are common to meet reporting and disclosure requirements of the Internal Revenue Service. In the past, attorneys and accountants preparing a Federal Estate Tax Return (Form 706) or a Federal Gift Tax Return (Form 709) may have not attached a comprehensive business appraisal report to the returns. Now, after the new standards of disclosure and various Tax Court cases, business valuation reports are advisable for family partnership transfers or closely held corporate stock transfers. Anacapa Valuations prepares complete business valuations and issues full or summary business valuation reports for either.
The subject ownership interest may be equity in a proprietorship, stock in a corporation (C or S), an interest in a partnership (FLP or LLC), or a fractional real estate interest. When doing asset based approaches, in accordance with professional appraisal standards, Anacapa Valuation relies upon the property values prepared by certified real estate appraisers or certified personal property appraisers, when using the asset approach.
Valuation discounts are one of the most important aspects of a business valuation for interests in non-publicly traded companies, minority ownership interests, and interest that lack control (e.g. limited partnership interests). The two primary discounts that are considered are:
Discount for lack of control (or minority discount);
and,
Discount for lack of marketability (or liquidity discount).
Fair Market Valuations and Transaction Planning
Business owner, Board of Directors for stock options (409A), potential investors (purchasers), existing or prospective partners, or employee stock ownership plan (ESOP) fiduciaries may need to determine a fair market value to a hypothetical buyer or seller of a subject company. This may be to establish a fair market value (FMV) for an actual transaction price (such as for ESOP stock repurchase or execution of a buy/sell agreement) or for information to use in sale or purchase negotiations. As a consultant, Anacapa Valuations can prepare an analysis and review of the subject company with extensive company analysis to provide sellers or investors of private companies a range of values and relevant value drivers for the target from which to negotiate a price. Fair market value is calculated; price is negotiated and may be higher or lower than fair market value, depending on the circumstances (strategic issues) and value drivers.
In addition, often Company directors or managers need a business valuation for financial reporting, bank loan applications, determining return on investment or equity, or strategic planning for an initial public offering (IPO).
At times, the engagement might call for an investment standard of value for a certain buyer or seller.
Divorce Valuations
Frequently, a business valuation is required to allow parties to negotiate or litigate a property settlement for their divorce. Both parties to the divorce may agree to hire a business appraiser as a joint expert. Or, the parties may each hire their own expert to value the business interest. In the latter case, the family law judge or arbitrator may consider the reports of each expert in determining the subject company’s value.