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5 Major Points Pharr Valuation & Business Services, LLC 1
5 Major Points
Pharr Valuation & Business Services, LLC 1
5 Major Points
1. Why Me
2. What It Is (What It “Ain’t”)
3. Why You May Need it
4. Business Valuation Overview
5. Case Studies
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Legal Stuff / Disclaimer
• I am not a Tax Attorney.• This should not be taken as tax or
estate planning advice, but only as issues and areas to consider.
• You should consult a experienced estate tax attorney when considering any gift or estate tax planning ideas or issues.
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• Jewelry Industry - 28 Years • EVP and CFO of Hoover & Strong, Inc.• JBT• 24K Club of New York• JVC• CPA• • • Specialty - Jewelry Industry
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• A Business Valuation is an Comprehensive Appraisal of the Overall Value of a Business or Business Interest.
“ It Ain’t “• A Business Valuation is not a:
– Real Estate Appraisal– Equipment or Machinery Appraisal– Inventory Appraisal
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• Typical client – Family Owned Businesses– Closely Held Companies.
• Gift & Estate Tax Planning• Succession Planning• Buy/Sell Agreements• Sales/Acquisitions/Mergers• Owner / Stockholder Disputes• Marital Dissolution
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• Dec 2012 – Gift & Estate Tax Laws Expire• Business Values are low. You can give
away a larger interest.• Dec 2012 – Gift & Estate Tax Laws Expire• Current Gift and Estate Tax Exclusion is
$5,120,000 per person – 35% Max Tax
• Dec 2012 – Gift & Estate Tax Laws Expire
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Purpose of Valuation
Interest being Valued
Standard of Value
Premise of Value
Financial Analysis
Economic Analysis
Company Analysis
Valuation Approach
Conclusion and Opinion of Value
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VALUATION REPORT
Trudi’s Fine Jewelry
Naples, Florida
Valuation Date: December 31, 2011
Report Date: February 3, 2012
• Full Valuation Report– Detailed Comprehensive Report– 75 to 100 Pages– Conclusion Of Value for the Appraised Interest– Support Values on a Gift or Estate Tax Return
• Calculation of Value– Less Detail– 20 to 40 Pages– Calculated Value Based on Agreed Upon
Procedures– General Ball Park Value
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• Time Frame: Four to Six Weeks• Cost:
– Generally Fixed Fee– Based on the Estimated Time Plus Expenses– Depends on Company Size, Complexity, Condition of
Records– Full Valuation Engagements
• 40 to 60 Hours
– Calculation of Value Engagements • 20 to 30 Hours
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• Gift & Estate Planning should be done• Owners need a Succession Plan• Having a Buy/Sell is better than not having
one• There is a mechanism to Fund the plan
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• Succession Plan• No Children• One Child• More than one Child who wants to be in the
business• More than one child, some want to be in the
business and some do not.• Gift the business to your children, sell it to them
or do some of both?
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Buy /Sell Agreements Selling to Other Owners
Buying Another Owner’s Interest
Selling to Existing Employees
Selling to someone outside the Company
Sources of FundsInternal
Life Insurance
Bank
Other
Hit Lottery / Get Lucky While at the Vegas Show
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• Death of a Spouse• Death of a Parent• Death/Retirement/Termination
– Family Member or Partner– Succession Plan– Buy/Sell Agreement– Funding
• Marital Dissolution - Owner Disputes
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5 Major Points
1. Why Me
2. What It Is (What It “Ain’t”)
3. Why You May Need it
4. Business Valuation Overview
5. Case Studies
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Dan PharrPharr Valuation & Business Services, LLC2720 Newquay LaneRichmond, VA 23236-1362Office: 804-332-5458 Cell: 804-370-3040Email: [email protected]: www.PharrValuation.com
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