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FAQs about Business Valuation and Litigation Support

When do I need to know the value of a business?

There are many situations that may require you to determine the value of a business, including:

  • Equitable distribution, spousal support, or child support
  • Buy-sell agreements
  • Estate or gift taxes
  • Charitable contributions
  • Liquidation
  • Employee stock option plans
  • Shareholder buyouts
  • Mergers and acquisitions
  • Saleor purchase of a business
  • Change of tax entity

What are the different types of business valuation?

There are two main types of business valuation engagements. A Conclusion of Value results in an opinion of value that is admissible in court and is required for Federal estate and gift tax purposes. A Calculation of Value results in an estimation of value; it is best suited for transaction planning (purchase/sale of business), strategic or estate planning or, in divorce situations where there is a reasonable likelihood that the parties may settle, as a planning aid in the settlement process since it can be expanded into a Conclusion of Value in the event a settlement is not reached.

Is there a difference in cost between a Conclusion of Value and a Calculation of Value?

Yes. The steps required for a Conclusion of Value are more extensive than those performed for a Calculation of Value, so a Conclusion of Value engagement costs more. While each engagement is unique, you should expect to spend $2,500 to $5,000 for a Calculation of Value and $10,000 to $40,000 for a Conclusion of Value.

Why does a valuation cost so much?

An accurate valuation requires considerable fact-finding related to the company, including personal interviews and site visits, analysis of the company’s financial performance over several years, analysis and comparison to similar companies, analysis of the economic environment in which the company operates, and other factors. We don’t simply enter your company’s financial information into a canned program that spits out a result. Rather, our analysis is specific to your company and informed by the knowledge we have gained in various industries over the past 13 years. If your case goes to trial, you can be confident that our experts will be knowledgeable, prepared, effective, and able to stand up to cross-examination.

Are there ways to keep the costs down?

Yes, you have several options to reduce the cost of a valuation engagement. If you do not need a report for litigation, Federal estate or gift purposes, you may want to consider a calculation engagement. If you are not sure whether the subject entity truly has value that is worth pursuing, we can perform preliminary procedures to determine a ballpark estimate – then you can decide whether to proceed with a complete business valuation.

Once you engage Aiken Warner PLLC, CPAs you can help keep costs down by providing complete and timely responses to our requests for information. If the company uses an accounting program like QuickBooks or Quicken, providing us with a copy of the complete file can eliminate many of our requests for detailed financial information.

Do you comply with professional standards?

Yes. Our business valuators are bound by the professional standards o f the Virginia Board of Accountancy, the American Institute of Certified Public Accountants (AICPA), and the National Association of Certified Valuators and Analysts (NACVA). This ensures that all work performed and reports issued will comply with the standards required of an expert who may be called upon to testify in court.

Do you provide appraisals of real estate or other tangible property?

No, Aiken Warner PLLC, CPAs is not an appraiser. If your engagement requires valuation of real estate or tangible assets, we will work with your appraiser to develop our final opinion of value.

Do you provide other litigation support services?

We offer a variety of litigation support services, including:

  • Tracing of funds and other assets
  • Search for hidden assets
  • Lost profits analysis
  • Wrongful termination analysis
  • Review or rebuttal of other experts’ reports
  • Income tax projections
  • Professional malpractice consulting
  • Retirement account projections
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