Michael B. Lehner, CPA/ABV, CFE, ASA
February 4, 2018
Cost approach M&A Business Valuation

Consider the cost approach in M&A

Under the cost approach, a company’s value equals the difference between its combined assets and liabilities. It requires a substantial amount of work to convert a cost-basis balance sheet to the required standard of value. This article explains how buyers and sellers are increasingly using this approach in mergers and acquisitions (M&As) to help compartmentalize the components of value, facilitate discussions about how to structure a deal and prepare for postsale purchase price allocations. This article also covers the basics, including the pros and cons, of this valuation approach.
January 24, 2018
Business Valuation buyout

Court increases dissenters’ buyout offer by more than 25%

When computer maker Dell decided to delist in 2013, the deal led to a showdown between management and dissenting shareholders who argued that management’s buyout price was unfair. This article explains why the Delaware Chancery Court decided to base fair value on a discounted cash flow analysis rather than the company’s stock price — and how taxes can have a major impact on value. In Re: Appraisal of Dell Inc., Delaware Ch., C.A. No. 9322-VCL, May 31, 2016
January 14, 2018
Family-owned business valuation

Family businesses bring valuation challenges

From the Rockefellers to the Kardashians, working together can bring out the best — and worst — in families. This article discusses four key questions valuation experts ask when valuing family businesses. They relate to family members on the payroll and other related-party transactions, management styles and key person discounts.
January 7, 2018
Buy-sell agreements

Buy-sell agreements: How to cover all the (valuation) bases

Every business with more than one owner needs a buy-sell agreement to handle voluntary and involuntary ownership transfers. This article explains why it’s important to update the agreement regularly and address all of the valuation issues that may arise.
October 16, 2017
gift and estate tax valuations

Recent developments that affect gift and estate tax valuations

Download Printable PDF In August 2016, the IRS proposed changes to the tax code intended to curb abusive estate planning practices involving family limited partnerships (FLPs) […]
October 2, 2017
hidden assets unreported income

Finding hidden assets and unreported income

Valuation experts are not responsible for finding fraud unless a client specifically hires them to conduct a forensic investigation. But the business valuation and forensic accounting disciplines often intersect. This article explains the warning signs that controlling shareholders are hiding assets or downplaying cash flow to minimize buyouts of their spouses or minority shareholders and why it’s important to hire a financial expert from the get-go. A sidebar discusses unintentional financial statement omissions — and how they may be unearthed.
September 25, 2017
valuation selling business

4 ways to add value before selling a business

Business owners typically want to maximize the selling price when it’s time to cash out — and buyers may be willing to pay top dollar if the company is positioned for future growth. This article discusses how valuation experts can help owners understand their strengths and weaknesses, allowing them to boost bargaining strength with potential buyers over the long run.
September 17, 2017
market approach iBusiness Valuation

Using the Market Approach in Business Valuation

There are three general ways to value a business: the cost, income and market approaches. This article focuses on the market approach, comparing and contrasting two methods that fall under it: the M&A method and the guideline public company method. Both have intuitive appeal, as well as various downsides, so they’re not applicable in every valuation assignment.
September 10, 2017
reasonable owner compensation business valuation

5 factors to help determine reasonable compensation in business valuation

The question of reasonable compensation is frequently debated in shareholder disputes, divorces and IRS inquiries. Owners’ compensation can vary significantly from company to company based on many factors, such as the owner’s education, licenses, training and salary history; the business’s size; and industry trends. This article explains five factors courts use to determine whether an owner-employee’s compensation is reasonable. Typically, a determination of reasonable compensation is objective, unbiased and based on relevant empirical data.
August 13, 2017
Business valuation experts business growth strategies

Business valuation experts can play a supporting role in business growth strategies

Business valuation experts can play many roles in facilitating a company’s success, including providing support to management in evaluating strategic investment decisions. This article discusses several ways companies can grow and the methods valuators use to analyze business projections and other financial data integral to determining successful growth strategies.