Scenarios when business valuation services are required

Cost of transfer:

When one subsidiary of a corporation sells products, services, or intangible property to another subsidiary, valuation for transfer pricing can assist the firm with strategic planning by identifying methods to enhance efficiency. The major reason why business valuation services are necessary for transfer pricing, whether in tax compliance or tax planning context, is because of IRS requirements.

Property tax:

Property tax is a major burden on businesses across the country since it is based on the value of tangible (and in some cases intangible) assets. A taxable property assessment can assist taxpayers in ensuring that they are paying their fair share.

Support for litigation:

A competent valuation can frequently avoid litigation by negotiating a settlement based on an actual fair market value. The expert evidence of a qualified company valuation specialist will enhance a case when the worth of the firm or its assets is contested if the case goes to trial or arbitration. Similarly, in a legal case, the lack of an independent third-party valuation presents a financial risk; without an expert judgment on value, the court will be forced to guess whether the party's estimate of worth is right, which may unfairly disfavor one of the parties in the dispute. In cases involving litigation, the best choice is to hire a valuation expert with litigation expertise.

Business sale:

Suppose the goal is to sell the company. In that case, business valuation services will determine the company's fair present worth and help in strategic planning to boost profitability, allowing the owners to increase its value before selling it. A company valuation can help guarantee that the firm's full worth is recognized in any later sale if the sale is not part of a plan but rather the consequence of unforeseen events. Because an independent valuation of the firm will almost certainly be required to finalize a deal, it's a good idea to figure out the property's fair market worth before putting it on the market.

Sale agreements:

Buy/sell agreements between participants in a partnership or a limited liability company (LLC) are important for preventing future disputes. A mutually agreed-upon value must first be determined through a company valuation to reach an acceptable agreement to all parties. If a partner or member decides to leave the company, failure to determine fair market value and sign buy/sell agreements might result in costly litigation in the future.

Businesses:

By restructuring, businesses can gain strategic advantages, tax savings, and operational cost reductions. Assets and intercompany transactions must be appropriately evaluated to maximize tax benefits while limiting risk.

Stock Ownership Plan for Employees:

To comply with ERISA and IRS regulations and create a fair stock price, shares in Employee Stock Ownership Plans must be evaluated yearly by an independent valuation specialist. Other reasons for business valuation services include share sales, mergers and acquisitions, business sales, and resolving shareholder disputes. Failure to get a stock value from a valuation specialist may result in fines or legal action.