Gettry Marcus, a leading business valuation and forensic accounting firm, discusses the benefits of having a business valuation expert value a company
Woodbury, NY / www.myprgenie.com / ACCESSWIRE / April 03, 2014 / Business owners and their advisors often ask if they should hire a business valuation expert or an industry expert to value their company. Top business valuation and forensic accounting firm Gettry Marcus responds to this commonly asked question. An industry expert is very familiar with the industry, how companies within the industry operate, the economic factors that affect the industry and its unique aspects. However, through independent economic and industry research, and one or more interviews with members of management, the valuation expert can identify those industry factors that would impact his valuation.
That knowledge will supplement the valuator’s many years of experience in the valuation of many companies in various industries. This, in combination with the valuation expert’s experience and training over many years, informs his judgment and knowledge as it relates to several key portions of the analysis.
Application of the appropriate standard of value is an important focus of the valuation. The value of the company could be vastly different under different standards of value; for example, the fair market value standard, used for gift and estate tax purposes, considers hypothetical, unrelated parties, whereas a valuation for synergistic purposes, a matrimonial dissolution, an ESOP or an employee stock option would each be performed under a different standard of value, with differing procedures, inputs and results. The valuation expert has many years of training in identifying the necessary standard of value and applying the appropriate procedures in the circumstances.
Similarly, the treatment of normalizing adjustments for discretionary expenditures, non-recurring expenses, and non-operating assets can be an important part of the analysis and valuation conclusion. Identifying such items comes from a careful and detailed financial analysis, for which valuation experts are specially trained. Such adjustments could take the form of salary and compensation adjustments, the separate treatment of excess working capital or the identification of above or below market rent. These items can have a significant impact on the valuation, and a valuation expert has experience in isolating them and their effect on value.
There are three approaches to valuation: the Income Approach, the Market Approach and the Asset Approach. Each approach relies on different sets of empirical data, has its own unique characteristics and requires the considered judgment of the valuator. For example, the selection of the proper rate of return under the Income Approach requires a thorough understanding of the underlying empirical data and its application to the subject company. The valuation expert is uniquely qualified to make these assessments.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Gettry Marcus CPA, P.C. is a top New York City and Long Island CPA firm with offices in Woodbury, Long Island and New York City. We provide accounting, tax, and consulting services to commercial businesses, high net worth individuals and various industries which include real estate and health care. We have one of the premier and most credentialed business valuation, litigation and forensic accounting groups in the New York Area. Our experience in diverse industries and a highly talented and experienced professional staff gives us the ability to share valuable insights into our clients’ businesses, to better understand their goals and problems and to help them attain the vision they have for their company.
Gettry Marcus is “Always Looking Deeper” to build value for our clients.
Media inquiries: Contact Stacey Ellenthal at 516-364-3390 ext. 247 or via email at Sellenthal@gettrymarcus.com
SOURCE: Gettry Marcus