Estate, Gift & Income Tax | M&A | Buy-Sell | MBO | ESOP | Dispute Resolution
contact usThe CBB Group provides accurate, independent business valuations (appraisals) that meet the highest professional standards. We serve clients throughout Oregon and beyond, in many industries. Our business valuations are commonly used in:
The CBB Group provides fair market value appraisals of closely-held corporations, Family Limited Partnerships (FLPs), partnerships and LLCs for gifts, estate tax, charitable donations, C to S Corp conversions and other tax purposes. We value fractional interests in operating companies, asset holding companies and family limited partnerships using appropriate discounts.
The IRS requires that a qualified business appraisal be performed by a qualified appraiser. The CBB Group’s qualified appraisers satisfy the IRS requirements, and are prepared to defend their work in the unlikely event of an audit. Our qualified appraisals comply with Revenue Ruling 59-60, USPAP and IRS valuation guidelines. An independent valuation by a qualified appraiser is your best defense against an IRS challenge.
A business appraisal is required to determine the value of a decedent’s interest in a closely held business. Generally, the estate tax return is due nine months after the date of death. Business owners who gift shares in their businesses must determine value as of the date of the gift. Gift tax returns are generally due on April 15th following the year in which a gift is made.
When business interests are donated to a Charitable Remainder Trust or 501(c)(3) nonprofit organization, a business valuation supports the charitable deduction by the donor taxpayer. Overvaluation penalties can be substantial if the amount claimed for tax deduction exceeds the fair market value of the interest transferred.
Accurate asset valuations are essential to estate planning and wealth preservation. For estates involving private businesses, a valuation is often the starting point for estate planning professionals as they consider various estate planning techniques to benefit the owner-taxpayer.
A valuation is needed when an existing C corporation converts to a subchapter S corporation (IRC §1374). The valuation establishes a tax basis for the corporate assets at the time of the S election. The tax basis is important because a sale of corporate assets within 5 years after conversion may be subject to built-in gains tax. Built-in gain is the amount by which the fair market value of an asset exceeds its adjusted tax basis as of the conversion date.
The CBB Group’s senior appraisers perform independent valuations to settle disputes over value. Our experts objectively apply appropriate valuation theory and methods within statutory guidelines, and within the emotional and often difficult atmosphere of owner disputes. Our ability to provide exceptional service in this arena is partly due to our real-world transaction experience, which most valuation experts don’t have.
Disputes include buy-sell share price disagreements, oppressed shareholder suits, dissenter’s rights cases, involuntary dissolution proceedings, and marital dissolutions (equitable distribution). Often we are brought in well before any legal action is taken, in collaborative processes and mediation; and are often jointly retained by the parties to help them reach an agreement without going to arbitration or trial. In legal proceedings, we can participate from initial case evaluation through arbitration and trial. In some cases we are court appointed.
In disputes, we usually serve as either (a) an independent business valuation expert providing oral expert witness testimony or written reports, or (b) a valuation consultant to an attorney and his or her client. As appraisers we bring expertise and impartiality to the dispute resolution process. We can also review valuation reports provided by other experts. As consultants we can assist in the development and execution of litigation strategy.
Disagreements with tax authorities arise because valuation is not an exact science and is based on the judgment of the appraiser and his or her interpretation of the facts and circumstances of a business. Our appraisers analyze facts and apply accepted business valuation methods to arrive at defensible opinions of value supported by a report that conforms to professional standards. We can defend our valuations in the unlikely event of an audit or challenge.
Parties involved in merger and acquisition discussions come to The CBB Group for objective and independent value opinions, as well as advice on transaction structuring and negotiations. In every M&A deal, one of the first, most important and most difficult questions to settle is, “how much is it worth?” Sellers need to know what price their business would likely command in the marketplace. Buyers need help understanding the investment value of a potential acquisition. Because purchase price can have such a significant effect on an acquiring company’s future returns and shareholder value, management should involve a valuation expert early in the acquisition process, before the price and terms are cast.
Deal participants need analysis and conclusions that they can trust. Because of our M&A advisory work, The CBB Group’s appraisers have exceptional knowledge of the real-world behavior of transaction participants. Our valuations are considered credible by buyers, sellers, boards of directors, trustees and management.
The CBB Group provides business valuations for a range of transactions, including sales, mergers and acquisitions, divestitures, management buy outs, employee stock ownership plans (ESOPs), leveraged buy-outs, capital raising, bank financing, recapitalizations, going private, liquidations and bankruptcy. A client may need a fairness opinion (a third-party confirmation of value) to complete a transaction that has already been negotiated. We evaluate transactions from a strategic or financial buyer viewpoint, based on client objectives and circumstances. Mergers usually require valuing two or more companies.
As M&A advisors, our transaction services go well beyond valuation. We work with clients through the entire M&A process to make successful business sales, and provide services for acquisitions and other business transactions.
Most buy-sell or shareholder agreements stipulate that the share price be based on an independent valuation. Without agreement on how shares will be valued, shareholders often find themselves negotiating price with former friends, their families or estates, after the interests of the parties have diverged. Such negotiations are difficult, fraught with conflict and uncertainty, and often lead to litigation.
Companies and shareholders come to The CBB Group for independent business appraisals when a shareholder retires, is fired, quits, passes away, becomes incapacitated, withdraws, or some other trigger event occurs. We also provide valuation services when buy-sell agreements are being created or updated, and periodically during the life of a business as shares are bought and sold, for buy-sell funding, for business planning, and for succession planning. Learn more about valuation for Buy-Sell Agreements.
By law, an ESOP cannot pay a price in excess of “adequate consideration” for any shares that it acquires, as determined by an independent appraisal of the fair market value of the sponsor company’s shares. An independent valuation must also be obtained at least annually, or whenever the ESOP purchases or sells stock.
Whether you intend to transfer your business to family, management or a third party, a proactive plan is important to ensuring a successful exit. Exit Planning often begins with a baseline business valuation. It may continue with strategic consulting to maximize shareholder value.
The CBB Group is a qualified source for business valuations for SBA 7(a) loans for business acquisitions (change of ownership). According to SBA Standard Operating Procedure 50-10-5(c), paragraph (i), for all business acquisition loans over $250,000, or whenever a buyer and seller have a “close relationship”, the lender must obtain an independent business valuation from a qualified source. Examples of close relationships are employer-employee, family members, co-owners, and parties with any existing non-arms-length relationship.