Valuations

“Business valuation is the general process of determining the economic value of a whole business or company unit. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership, taxation, and even divorce proceedings.” —Investopedia definition

KD- Partners provides Certified Valuation Services for businesses and individuals. We are certified by the National Association of Certified Valuators and Analysts (NACVA) and perform all certified work in accordance with NACVA and Uniform Standard of Professional Appraisal Practice (USPAP)

Adhering to industry standards ensures that peer-reviewed valuation methods are used to develop supportable and defendable opinions of value that clearly “tell the story” of the subject’s risk environment, financial and operating performance. We also stay abreast of industry trends, tax changes and improved methods and data bases as members of the NACVA.

There are a host of reasons and individual or business would require a business valuation; including:

KD-Partners offers four different valuation products:

Business Opinion of Value

The Business Opinion of Value (BOV) Report is a small business pricing report. The BOV report is used to “put a stake in the ground” by buyers sellers, and business brokers, to determine reasonable selling / listing prices for small companies.

The BOV report provides a business professional’s opinion of value and it is not a formal valuation or appraisal. uses formulas and valuation methodologies developed by and are accepted by the business brokerage and / or business valuation communities. However, it is not a certified valuation or appraisal. We believe it provides a reasonable basis for estimating the likely selling / listing price of a small business.

The BOV is not provided as an appraisal service of a professional appraisal as defined by USPAP but rather a consulting service. Therefore, it is not required to comply with these standards.

Calculation of Value

A Calculation Engagement is used when the client and the appraiser agree to specific valuation approaches, methods, and the extent of selected procedures with minimal if any research into the history and nature of the subject business, industry trends and outlook, the economic outlook, financial benchmarks, etc. A Calculation of Value Report is not suitable for litigation, IRS purposes, or valuations for government guaranteed loans, such as SBA-guaranteed loans. However, a Calculation of Value can be used for preliminary estimates of value for estate planning, for settlement or mediation purposes, or in an acquisition or sale of a business.

Business Valuation Report

This report is referred to as a restricted-use appraisal report which means the report is restricted to use by the client. This report provides the appraiser’s opinion of the value of the subject company based on the standard of value known as “Fair Market Value” described as follows:

To appreciate this standard (or definition) of value, it is important to understand that “fair market value” as defined for this valuation includes the following assumptions:

1. the hypothetical buyer and seller are both willing, and thus interested in the transaction, and can enter into this transaction, implying that the hypothetical buyer has enough funds to enter into the transaction;

2. the hypothetical buyer is prudent, implying a rational buyer, but is not motivated by any strategic or synergistic influences, where the buyer contributes only capital and management of equivalent competence to that of current management;

3. generally, the business will continue as a going concern and not be liquidated, unless the collection of individual assets is more valuable if put to separate uses; and

4. the hypothetical sale will be for cash.

Typically, this report is used to determine the value of the subject (excluding real estate, if any) in preparation for its sale/acquisition. This is a restricted use report and is intended for the client’s use only. A third party may not interpret this report without access the appraiser’s work file.

This report is prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and NACVA guidelines. Since it is restricted use and cost effective, portions of the report that the client would be totally familiar with are eliminated. For example, areas that are researched but not documented in detail in the report include the history of the company, the local and national economy, industry forecasts, a comparison of the subject with industry and a step-by-step display of all formulas and calculations.

Business Appraisal Report

This comprehensive report provides an opinion of value or the subject company based on the standard of value known as “Fair Market Value” as described below:

To appreciate this standard (or definition) of value, it is important to understand that “fair market value” as defined for this valuation includes the following assumptions:

1. the hypothetical buyer and seller are both willing, and thus interested in the transaction, and can enter into this transaction, implying that the hypothetical buyer has enough funds to enter into the transaction;

2. the hypothetical buyer is prudent, implying a rational buyer, but is not motivated by any strategic or synergistic influences, where the buyer contributes only capital and management of equivalent competence to that of current management;

3. generally, the business will continue as a going concern and not be liquidated, unless the collection of individual assets is more valuable if put to separate uses; and

4. the hypothetical sale will be for cash.

This report can be used for any purpose and is prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and NACVA guidelines.

We perform all valuation in compliance with the Uniform Standards of Professional Appraisal Foundation (USPAP) as well as the Business Appraisal Standards of the National Association of Valuators and Appraisers (NACVA).