Michael B. Lehner, CPA/ABV, CFE, ASA
June 18, 2013
road block buy sell

Avoid roadblocks with a reliable buy-sell agreement

Even the most successful businesses may run into roadblocks when struck by unexpected events, such as death, disability or divorce. A well-reasoned buy-sell agreement can help businesses maintain control and ensure orderly ownership transfers. This article discusses the ins and outs of buy-sell agreements, noting the importance of obtaining an independent appraisal and the need to define key terms such as the standard of value and the valuation date. All of these factors combine to generate a valuation that is objective, independent and fair.
June 18, 2013
Shareholder disputes call for valuation expertise

Shareholder disputes call for valuation expertise

When shareholders disagree — for example, when minority shareholders oppose a major corporate decision or a controlling owner is accused of wasting corporate assets — the owners may need an appraisal to equitably part ways. But before valuing a privately held minority interest, an appraiser has to address several issues, such as the appropriate standard of value, valuation discounts and adjustments, and the effective appraisal date. This article uses a hypothetical example to highlight these issues, showing how appraisers bring their experience and expertise to bear and help shareholders reach a fair settlement.
December 10, 2012

When subsequent events count in business valuation

Private business appraisal must be based on information available at the required date of appraisal, according to Revenue Ruling 59-60. Business valuation experts generally consider only information that is “known or knowable” on the valuation date. But there are exceptions to this rule. In a recent case, Estate of Jung v. Commissioner, the U.S. Tax Court made an important distinction between subsequent events that affect fair market value and those that provide an indication of value. This brief article explains this distinction and under what circumstances business valuation experts may be able to use subsequent events in their analyses. Estate of Jung v. Commissioner, 101 T.C. 312, 1993
December 1, 2012
business valuation SWOT analysis

SWOT analysis in Business Valuation

Many business managers use strengths, weaknesses, opportunities and threats (SWOT) analysis to frame their strategic planning. Valuators may also use it to help evaluate a company’s performance — as well as its future prospects. This article discusses the various steps in SWOT analysis and how each area affects the company’s value. The article explains the role of a valuator in helping to evaluate subjective assessments concerning a business’s strengths, weaknesses, risk — and return.
December 1, 2012

Buy-sell agreements: Cover all the valuation bases

Buy-sell agreements act as a form of insurance to protect companies during significant ownership changes, whether foreseen or unforeseen. A good agreement’s buyout terms and provisions can ensure the company remains stable and solvent through upheaval. This article notes the importance of periodic updates and discusses the elements of a well-reasoned, supportable buy-sell agreement. The article points out how an experienced valuator can help ensure the agreement is fair to all shareholders.
October 21, 2012
mergers and acquisitions

Creative ways to structure mergers and acquisitions

A business valuation expert can help the seller of a business understand what the business is worth and discuss different ways to structure a deal, depending on the owner’s priorities and aversion to risk. This article explains the ins and outs of determining a reasonable asking price and talks about the different types of value that may apply, including strategic value and fair market value. The article shows how valuators can help buyers and sellers negotiate mutually advantageous terms.
August 18, 2012
business valuation fraud

Fraud affects business valuations, too

Occupational fraud occurs when someone uses his or her job for personal enrichment through the deliberate misuse or misapplication of an employer’s resources or assets. Such activity can skew financial results and lead to erroneous value conclusions — unless a valuator adjusts the financial statements for fraud. Appraisers don’t audit for fraud in the course of a typical business valuation assignment, but this short article explains that companies can still include them in their overall efforts to prevent fraud.
June 20, 2012

Back to the future: Create a viable buy-sell agreement now

A business owner needs a buy-sell agreement to provide liquidity and an orderly transition in the face of unexpected change. This article discusses the importance of ensuring the agreement is properly thought out. Failing to clearly define how value is to be determined, and how often, can lead to disputes that may undo the benefit of having a buy-sell agreement in the first place. The article explains that employing experienced valuation professionals can help avoid these problems and help address share price and funding issues.
October 22, 2011
collaborative divorce business valuation expert

The benefits of collaborative divorce

This brief article explains collaborative divorce, a way to split up marital estates amicably and creatively while minimizing professional fees and court costs. In collaborative divorce, each side hires its own attorney, and then the parties meet regularly to brainstorm settlement options. Collaborative divorce can save time and money because it requires just one neutral financial expert.