Business Valuation Services
Whether you are getting ready to buy or sell a business or need a valuation for gift and estate tax reporting, LBMC’s business valuation services offer support for both our business and individual clients.
LBMC’s valuation and advisory team has comprehensive experience to provide defensible valuations in a responsive and timely manner. We can provide solutions for both traditional and complex valuations on behalf of closely held and middle market companies, healthcare organizations and physician practices, public, near-public and private equity companies, as well as high-wealth individuals.
We have the certifications and expertise to analyze and communicate the valuations of companies, intangible assets, and compensation arrangements. We also have an understanding of regulatory compliance issues that impact healthcare and other industries.
LBMC offers business valuation services using an in-depth understanding of accepted valuation methodologies to produce a defensible report for appraisals and fairness opinions. Combining LBMC’s valuation services with our tax, transaction advisory services, accounting and financial expertise within LBMC’s Family of Companies, we can effectively customize services across divisions all under one roof.
Business Valuations Services
- Gift and estate tax planning and reporting
- Financial reporting (purchase price allocations, goodwill impairment testing)
- Stock-based compensation (Section 409A and Section 83(b))
- Merger & acquisition (M&A) valuations
- Intangible asset valuations
- Employee stock ownership plans (ESOPs)
- Cash flow forecasting for strategic business planning
- S-corporation elections
- Buy/sell agreements
- Joint venture agreements
- Due diligence services
- Fairness opinions
Healthcare Valuation Solutions
- Company valuations
- Intangible assets
- Compensation arrangements for transactions
- Regulatory compliance
- Certificates of Need (“CONs”)
- Commercial reasonableness studies
- Fixed assets
- Valuations for financial reporting
- Litigation support services
- Physician Employment Arrangements
- Physician On-Call Arrangements
- Medical Director Arrangements
- Management Service Agreements
- Joint Venture and Leading Arrangements
- Professional Services Arrangements
- Subsidy and/or Collection Guarantee Arrangements
- Clinical Co-Management Arrangements
- Due Diligence
Financial Reporting Valuations
LBMC provides valuation services for financial reporting purposes, including purchase price allocations (ASC 805) and goodwill impairment testing (ASC 350). Our clients operate in diverse industries (e.g. distribution, healthcare, technology, manufacturing) and have retained us to value several types of intangible assets, including the following, and complex earnouts:
- Trade names and trademarks
- Internally developed proprietary software
- In-process research and development
- Customer contracts and relationships
- Non-competition agreements
- Assembled workforce
Stock-Based Compensation and Employee Stock Ownership Plans (ESOPs)
LBMC provides business valuation services for ESOPs and stock-based compensation, including stock options, restricted stock and stock appreciation rights, that help our clients navigate tax issues related to the issuance of stock-based compensation to their employees. Two common events requiring an independent valuation are as follows:
- A company issues employee stock ownership plans requiring Section 409A compliance with tax regulations to establish the strike price for stock options that is greater than or equal to fair market value.
- A company issues restricted stock and the employee receiving restricted stock desires to make a Section 83(b) election.
Mergers and Acquisitions (M&A)
LBMC’s M&A valuation team can help your business navigate the financial complexities of mergers and acquisitions. When it’s time for you to buy or sell a business, or at least a portion of one, you want to make sure the price is fair value. We can all agree that the seller desires top dollar while buyers prefer a bargain. Determining that the fair value price can be a challenge. Therefore, when our team conducts a valuation, we consider all relevant approaches and offer an unbiased, well-researched valuation to help you understand the value assigned to the business sale.
As a regional firm with national reach, LBMC offers expert valuation and appraisal services for mergers and acquisitions. Our team provides representation to business sellers, and buyers, helping them make optimal acquisition decisions. Our seasoned professionals can tailor services to provide your business with several valuation approaches and are also equipped to assist with other aspects of the due diligence and transaction process.
Preparing Buy-Sell Agreement for Valuation
Businesses with more than one owner should always have a buy-sell agreement to handle both expected and unexpected ownership changes. When creating or updating your company’s buy-sell agreement, be sure you’re prepared for the valuation issues that will come into play.
Triggering Events that Activate a Buy-Sell Agreement
Emotions tend to run high when owners face a “triggering event” that activates the buy-sell. These triggering events include the death of an owner, the divorce of married owners or a dispute between owners.
The departing owner becomes the seller who wants to maximize buyout proceeds. The buyers are the other owners or the business itself, and it’s in the buyer’s financial interest to pay as little as possible. A comprehensive buy-sell agreement takes away the guesswork and helps ensure that all parties are treated equitably.
Some owners decide to have the business valued annually to minimize surprises when a buyout occurs. A requirement for a formal valuation by a qualified business valuation professional is always preferable to using a static valuation formula in the buy-sell agreement because the value of the interest is likely to change as the business grows and market conditions evolve.
Buy-Sell Agreement Protocols
At a minimum, the buy-sell agreement needs to prescribe various valuation protocols to follow when the agreement is triggered, including:
- How will the value be defined?
- Who will value the business?
- Will valuation discounts apply?
- Who will pay appraisal fees?
- What’s the timeline for the valuation process?
It’s also important to discuss the appropriate “as of” date for valuing the business interest. The loss of a key person could affect the value of a business interest, so timing may be critical.
Developing a Buy-Sell Agreement
Business owners tend to put planning issues on the back burner, especially when they’re young and healthy and owner relations are strong. However, the more details that you put in place today, including a well-crafted buy-sell agreement with the right valuation components, the easier it will be to resolve buyout issues when they arise. LBMC’s business valuation team would be happy to help.