Valuing the Closely Held Business (Completed)

Date: Monday, July 23, 2018
Instructor: Edward Mendlowitz
Begin Time:  9:00am Pacific Time
10:00am Mountain Time
11:00am Central Time
12:00pm Eastern Time
CPE Credit:  2 hours for CPAs

Arriving at the Best Valuation for a Closely Held Business
There are many ways to value a business, but only one way that is absolutely correct – the price when it is sold! However, there are many occasions where a business needs to be valued such as for a personal financial plan or financial statement, for a marital separation, for owners’ buy-sell agreements, for borrowing or prospective investor purposes, gift and/or estate tax purposes, or for sale, merger or acquisition negotiations or transactions. Each purpose requires a different method of valuing the business. These methods will be discussed and illustrated with explanations of why they are the “right” method for that purpose.

Another important reason for valuing a business is to plan for the owner’s long-term financial security, eventual retirement, and estate and succession planning. If the business’ value is misunderstood and not applied properly as part of a forward-leaning plan, misleading information may wound both the company and nullify its owner’s expectations.

This program will cover many ways the business can be valued, how it can be valued, the process of normalizing earnings, valuing the assets, cash flow, and by using a market approach. This fast-paced program will illustrate many ways the same business can be valued using a base company for all the illustrations. Valuation techniques will be provided to accountants who are not valuation specialists so they could conduct preliminary meetings with their clients to help them understand how their business would be valued under myriad circumstances.

Who Should Attend
All CPAs and financial advisors who meets with clients who ask about the value of their business; owners, partners and senior staff who want to be able to discuss with their clients what their business is worth; anyone who wants to expand their knowledge in advising clients about the value drives in their business; and, pwners, CFOs and controllers of closely held businesses.

Topics Covered

  • Selecting the right standard of value
  • The importance of using the proper valuation date
  • Ten ways the same business can be valued
  • Documents needed to perform the valuation
  • How earnings can be normalized
  • Determining capitalization rates which will result in the ultimate valuation
  • Defining the engagement and level of responsibility with an engagement letter
  • When valuation discounts are appropriate and what discount percentages
  • How to obtain credible industry and economic data
  • What you should never give to the client
  • Why you should avoid representing the client as a valuation "expert" unless you are truly an "expert" willing to testify

Learning Objectives

  • Gain a practical understanding of how a business is valued
  • Know which valuation method is applicable under various circumstances
  • How to prepare a preliminary business valuation
  • How to leverage your knowledge of the client to maximize the validity of the value you come up with

Level
Intermediate

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
A basic understanding of federal income and business taxation topics.

Advance Preparation
None

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