Recent Business Valuation Engagements
Wallace Valuation Advisors has been specializing in the valuation of business enterprises and financial assets for over 25 years. Our firm’s valuation professionals are accredited by the American Society of Appraisers, the American Society of Certified Public Accountants, the Institute of Business Appraisers, and the National Association of Certified Valuation Analysts. Members of the firm have extensive experience valuing business enterprises for a variety of purposes, including:
- Estate and Gift
- Income Tax
- Shareholder Disputes, including Corporation Code Section 2000 (Fair Value)
- Eminent Domain
- Business Litigation (Involving Asset Valuation)
- Family Law
In addition, Wallace Valuation Advisors has performed valuations across a variety of industries and business types. A list of recent valuations by industry is included here.
Estate and Gift Tax
Agricultural Operation (Estate Tax) – We were engaged to provide our opinion as to the fair market value of a $100 million agricultural and real estate enterprise for estate tax purposes. The Estate was largely made up of a large sole proprietorship which included significant property holdings used for farming as well as current and future development. Members of the firm assisted counsel in the successful defense of the discount appraisals which analyzed the nature, organization, and operations of the sole proprietorship. Our analysis assisted in preserving the family business by allowing the Estate to elect under Code Section 6166 to pay the estate tax (over $50 million) in installments over a period of 10 years.
Operating Company (Gift Tax) – We were engaged to provide an opinion of the fair market value of a minority interest in a specialty beverage bottling/distribution company with annual sales of over $100 million. The Company was in the midst of a large expansion to its bottling lines and our valu-ation was largely derived through a discounted cash flow analysis of the company’s projections and capital budgets.
Asset Holding Partnership (Estate Tax) – We were engaged to determine the value of a limited part-nership interest in a partnership holding real property and marketable securities. The total asset value measured in excess of $75 million. Discounts for lack of control and lack of marketability were determined for the individual asset classes (real property versus investments) and then the indicated discounts were weighted based on the proportion of those assets to the whole to determine the final discount of 40% applied to the subject interest.
Promissory Notes (Estate Tax) – The Firm opined on the fair market value of a portfolio of promissory notes. The decedent was active as a hard money lender, and at the time of his death, had a portfolio of 20 promissory notes with varying terms, security, conditions and levels of security. The Firm performed an extensive analysis of the “quality” of the notes, including an analysis of the security for each note, which resulted in discounts ranging from 10% to 60% on the various notes.
Fractional Interests (Gift Tax) – We were engaged to assist with an audit defense and support discounts determined by another appraiser for the Estate’s ownership of fractional interests in four multitenant residential properties located in San Francisco, California. Discounts for lack of control and lack of marketability were determined using comparable transaction data as well as a discounted cash flow model in which the timing and cash flows stem from an assumed partition of the property. The Estate used our report to successfully defend the claimed discounts.
Operating Company (Gift Tax) – We provided our opinion of the fair market value of a minority common stock interest in a C-Corporation, located in San Francisco, California, engaged in scrap metal recycling. The company generated over $35 million in revenues and had been in business for over 75 years. Our opinion of value included an analysis of the net asset value of the Company with consideration given to the issue of built-in capi-tal gains taxes on certain appreciated assets.
Operating Company (Gift Tax)– We provided our opinion of the fair market value of a minority common stock interest in a C-Corporation, located in San Francisco, California, engaged in scrap metal recycling. The company generated over $35 million in revenues and had been in business for over 75 years. Our opinion of value included an analysis of the net asset value of the Company with consideration given to the issue of built-in capital gains taxes on certain appreciated assets. Back to Top
Property Development (Bankruptcy / Income Tax) – We were engaged to provide our opinion of the value and solvency of 15 real estate holding/development entities for the purpose of substantiating an income tax deduction resulting from the taxpayer’s claim of worthlessness. Our valuation report and testimony were used in supporting a $95 million refund for the taxpayer.
Goodwill Determination of Allocation (Income Tax) – The IRS contested the goodwill allocation which had been made by the client’s CPA following the sale of the client’s operating business. Goodwill made up 65% of the total purchase price, and the IRS contended that the purchased goodwill constituted goodwill of the enterprise and was subject to corporate versus personal taxation. To respond to the IRS challenge, Wallace Valuation Advisors was engaged to analyze the transaction in regard to the allocation of goodwill. It was our determination that the original allocation by the taxpayer was correct, and the goodwill was attributed to the personal efforts and relationships built up by the owner/manager. Our report was submitted to the IRS and we successfully defended our analysis. Back to Top
Shareholder Disputes, including Corporation Code Section 2000 (Fair Value)
Construction (Section 2000) – We were engaged to assess the value of a construction com-pany specializing in structural steel. Its expertise in design and fabrication led to success, but a dispute among the shareholders led to the need to determine the value in liquidation under the regulations provided in California Code Section 2000. Our report and our con-sulting services were utilized in mediation and resulted in a positive outcome for our client. Back to Top
A listing of recent engagements is included below.
Recent Valuations by Industry
|Business Type||Valuation Issues|
|Propane/Hardware/Poultry||Unrelated business entities operating under a single corporate entity|
|Cigarette and Dry Goods Distributor||Multiple classes of voting and non-voting stock with various restrictions|
|Trucking Company||Entities operating in various states|
|Medical Centers||Merger of two centers in the same market area|
|Family Limited Partnerships||Real estate and securities, often with tiered level discounts|
|Farming Operations||High asset values, typically with low cash flows|
|Funeral Home/Cemetery||Large number of unrelated shareholders; strong dividend history|
|Urgent Care Facility||Valuation of lost goodwill due to relocation|
|Auto Repossession||Assisted management with the sale to a public company|
|High-tech Company||Valuation for incentive stock compensation plan|
|Hi-tech Telecommunication||Corporate restructuring|
|Beverage Product Manufacturing||Sale to Employee|
|Promissory Notes||Valuation of 40 million in promissory notes for estate tax purposes. Discount approximated at 65% due to interest rate, length of loans, and subordination clauses in the loan agreement|
|Personal Goodwill||The Firm was retained to determine the allocation of the purchase price resulting in substantial allocation to Personal Goodwill and avoidance of a double income tax|