[et_pb_section fb_built=”1″ _builder_version=”4.16″ global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row _builder_version=”4.18.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” custom_padding=”0px||0px||false|false” width=”100%” sticky_enabled=”0″][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}” theme_builder_area=”post_content”]The selection of a business valuation expert becomes critical if you or your clients have a need to \u201cknow\u201d the value of a business. There are several considerations that must be made before selecting an expert. <\/span>These qualifications and characteristics apply in any engagement:<\/p>\n \u2022 Is the analyst certified by a recognized national credentialing organization and subject to standards of work and ethics by that organization? These unique considerations depend on the context of some of the most common uses of a business valuation.<\/p>\n Estate\/Gift<\/strong> If a family limited\u00a0partnership (FLP), or similar entity, is being contemplated by the taxpayer, a skilled valuation expert can help design the entity to avoid later issues. The valuation expert can be critical in defending the entity before the IRS.<\/p>\n Employee Stock Ownership Plans<\/strong> In recent months. the DOL has challenged some initial transaction valuations based on too little compensation being paid to the selling officer\/owner.\u00a0 The result remains undetermined, but it appears the DOL believes the valuation is too high, resulting in too much consideration paid by the ESOP for the shares. The next logical step is for the DOL to look at all officer\/owner compensation in all subsequent valuations, even for minority positions.\u00a0 In our view, being \u201cfair\u201d to employees requires examining these components even in a minority situation. Where Do I Find Such an Expert?<\/strong> The selection of a business valuation expert becomes critical if you or your clients have a need to \u201cknow\u201d the value of a business. There are several considerations that must be made before selecting an expert.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"The selection of a business valuation expert becomes critical if you or your clients have a need to \u201cknow\u201d the value of a business. There are several considerations that must be made before selecting an expert. <\/span>These qualifications and characteristics apply in any engagement:\n\n\u2022 Is the analyst certified by a recognized national credentialing organization and subject to standards of work and ethics by that organization?\n\u2022 Are they current in their education and knowledge?\n\u2022 Do they have deep and varied experience in valuing businesses (not just the type of business you want to be valued)?\n\u2022 Do they have a depth of business knowledge outside of just valuing businesses?\n\u2022 Do they have a reputation for being independent, objective, and reliable?\n\u2022 Are they clear in their description of the work that is to be done, the information they will need to do the work, the time it will take, and the cost of the valuation engagement?\n\nThese unique considerations depend on the context of some of the most common uses of a business valuation.\n\nEstate\/Gift<\/strong>\nThe Internal Revenue Service (IRS) is a highly experienced player on the other team when it comes to the valuation of business interests for estate and gift tax purposes. The valuation expert should have an excellent understanding of the reporting requirements imposed by the IRS, as well as a current and working knowledge of relevant court cases and IRS regulations. A valuation expert engaged early in a planning setting is invaluable to preventing problems \u201cdown the road.\u201d Strong knowledge and experience in this type of engagement are essential.\n\nIf a family limited\u00a0partnership (FLP), or similar entity, is being contemplated by the taxpayer, a skilled valuation expert can help design the entity to avoid later issues. The valuation expert can be critical in defending the entity before the IRS.\n\nEmployee Stock Ownership Plans<\/strong>\nThe Department of Labor (\u201cDOL\u201d) is the user of note in these engagements.\u00a0 Their purpose is to (rightfully) ensure a fair valuation for the ESOP participants.\u00a0 As such, it is often best to err on the side of caution when determining a value.\u00a0 This can include some non-standard adjustments such as for compensation and rent paid to related parties.\u00a0 Typically, a valuation analyst only considers those two adjustments if a control position is being valued.\u00a0 We believe that officer\/owner compensation and rent paid to related parties should always be considered, if not always adjusted.\n\nIn recent months. the DOL has challenged some initial transaction valuations based on too little compensation being paid to the selling officer\/owner.\u00a0 The result remains undetermined, but it appears the DOL believes the valuation is too high, resulting in too much consideration paid by the ESOP for the shares. The next logical step is for the DOL to look at all officer\/owner compensation in all subsequent valuations, even for minority positions.\u00a0 In our view, being \u201cfair\u201d to employees requires examining these components even in a minority situation.\nWe\u2019re being proactive on our stance and examining it now.\n\nWhere Do I Find Such an Expert?<\/strong>\nCall us about your valuation needs. We have the business valuation knowledge and skills to handle most tasks. Or, we can help you locate an experienced professional for your specific\nsituation.","_et_gb_content_width":"","footnotes":""},"categories":[5,8,9,6,7],"tags":[],"class_list":["post-269","post","type-post","status-publish","format-standard","hentry","category-all-blog-entries","category-corporate","category-employee-compensation","category-esop","category-succession-planning"],"_links":{"self":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/posts\/269","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/comments?post=269"}],"version-history":[{"count":0,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/posts\/269\/revisions"}],"wp:attachment":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/media?parent=269"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/categories?post=269"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/tags?post=269"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\u2022 Are they current in their education and knowledge?
\n\u2022 Do they have deep and varied experience in valuing businesses (not just the type of business you want to be valued)?
\n\u2022 Do they have a depth of business knowledge outside of just valuing businesses?
\n\u2022 Do they have a reputation for being independent, objective, and reliable?
\n\u2022 Are they clear in their description of the work that is to be done, the information they will need to do the work, the time it will take, and the cost of the valuation engagement?<\/p>\n
\nThe Internal Revenue Service (IRS) is a highly experienced player on the other team when it comes to the valuation of business interests for estate and gift tax purposes. The valuation expert should have an excellent understanding of the reporting requirements imposed by the IRS, as well as a current and working knowledge of relevant court cases and IRS regulations. A valuation expert engaged early in a planning setting is invaluable to preventing problems \u201cdown the road.\u201d Strong knowledge and experience in this type of engagement are essential.<\/p>\n
\nThe Department of Labor (\u201cDOL\u201d) is the user of note in these engagements.\u00a0 Their purpose is to (rightfully) ensure a fair valuation for the ESOP participants.\u00a0 As such, it is often best to err on the side of caution when determining a value.\u00a0 This can include some non-standard adjustments such as for compensation and rent paid to related parties.\u00a0 Typically, a valuation analyst only considers those two adjustments if a control position is being valued.\u00a0 We believe that officer\/owner compensation and rent paid to related parties should always be considered, if not always adjusted.<\/p>\n
\nWe\u2019re being proactive on our stance and examining it now.<\/p>\n
\nCall us about your valuation needs. We have the business valuation knowledge and skills to handle most tasks. Or, we can help you locate an experienced professional for your specific
\nsituation.[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"