Business Valuationfor Estate Planning
Knowing your business’s value is key to smooth wealth transfer, fair asset distribution, and accurate IRS reporting.
Our certified appraisers provide thorough business valuations to help secure your company’s legacy for future generations.
Why Business Valuation Matters for Estate Planning
Accurately valuing your business is key to structuring your estate for wealth transfer, tax reduction, and continuity. We provide tailored business valuations prepared by certified appraisers for estate planning.
Ensure Fair Asset Distribution
Accurate valuations ensure equitable distribution among heirs, reducing conflicts and ensuring fairness.
Reduce Estate Tax Liabilities
Proper valuation helps lower estate taxes by providing a clear, defensible business value for reporting and planning.
Plan for Liquidity and Continuity
Precise valuations aid in planning liquidity for estate taxes and ensuring smooth business operations after the owner’s passing.
Ensure Smooth Ownership Transfer
Valuations clarify the business's true value, ensuring a seamless transfer to family members.
Asset Approach in Estate Planning
The asset approach can be a key method for valuing a business in estate planning, particularly for asset-intensive businesses and holding companies. This approach includes two primary methods: the book value method, which evaluates assets based on their recorded values in the financial statements, and the adjusted net asset value method, which assesses the current market value of assets and liabilities. By applying this approach, an accurate valuation can be achieved, facilitating a smooth transfer of wealth and helping to minimize tax implications.
Income Approach in Estate Planning
The income approach focuses on the business's earning potential, projecting future income to guide accurate estate and tax planning. We use three common methods: capitalization of earnings, the multi-stage growth method, and discounted cash flow (DCF) analysis. By evaluating past financial performance, these methods allow us to estimate future earnings and provide a clear picture of the business’s ongoing value,helping you understand its impact on inheritance and tax obligations.
Market Approach in Estate Planning
The market approach compares your business to similar privately held businesses to determine fair market value. We have access to subscription-based databases that track transactions of privately held companies that have been bought and sold. This allows us to calculate valuation multiples, such as sales, EBITDA, and SDE multiples, specific to your business. The list of comparable transactions used in your valuation is included in the report to ensure accuracy and defensibility. This approach ensures that your valuation is not based on large public or private companies that could misvalue your business, potentially leading to inappropriate tax bills, and supports equitable asset distribution in estate planning.
Step 1: Data Collection
Your certified appraiser will guide you on which documents are needed for the valuation, such as profit and loss statements,balance sheets, tax filings, and other relevant financial records. You can also find a list of requested information in Sections 3and 4of our Definitive Guide to Business Valuation Reports - be sure to focus on the information needed for Certified Summary Reports.
Step 2: Financial Review and Adjustments
For gift and estate planning, we collect,review, and adjust your financial data to ensure an accurate representation of your business’s value. These adjustments focus on non-operational and non-recurring expenses to reflect the true performance of the business. It's important to note that these adjustments are specific to the valuation process and do not change your actual financial statements in your accounting software.
Step 3: Benchmarking and Valuation
We compare your business’s performance to similarly sized companies in the same industry, using benchmarks that provide key insights and highlight any adjustments needed for a more accurate valuation. These steps culminate in a clear and thorough valuation report, giving you a comprehensive understanding of your business’s financial position. The Certified Summary Report is essential for effective gift and estate planning, ensuring an accurate assessment of your business’s value for wealth transfer purposes.
Valuation Spotlight
Business Valuations for Estate Planning
Certified Business Valuation Summary Report
When navigating divorce proceedings, a Certified Business Valuation Summary Report is essential for determining the value of the business. Our comprehensive 65+ page report, prepared and signed by a NACVA Certified Appraiser, provides an in-depth, well-documented analysis that meets professional standards, including NACVA and USPAP. This detailed report is designed for both legal and financial professionals, ensuring clarity in the division of assets. Additionally, we are available to provide expert testimony to explain the valuation and address any questions during mediations, trials,or informal meetings. With a four-week turnaround (rush options available), you can rely on substantiated insights to achieve equitable asset division and safeguard your financial future.
What to Expect During the Valuation Process
Transparent Clear Communication
BizWorth provides a clear and transparent valuation process, ensuring that clients are fully informed every step of the way, so that the process proceeds smoothly and all concerns are addressed.
Comprehensive Valuation for Compliance
Our approach is designed to meet all estate tax and IRS gifting requirements, ensuring that your valuation is compliant with the necessary regulations.
Detailed Financial Analysis
We conduct a comprehensive analysis of your business’s financial health to ensure an accurate estate tax valuation. This evaluation includes a review of financial statements, historical performance,and projected future earnings, providing a clear picture of your business’s current value for estate planning purposes. Our goal is to deliver defensible insights that support effective wealth transfer and minimize tax liabilities.
Expert Testimony and Support
In cases where legal disputes arise, BizWorth offers expert witness services. Our valuation experts are prepared to provide testimony and support to substantiate the accuracy of your estate planning valuation.
Key Factors that Impact an Estate Business Valuation
When planning for the future of your estate, understanding the key factors that influence your business's valuation is essential. BizWorth carefully evaluates several critical elements to ensure an accurate and comprehensive valuation tailored to your estate planning needs.
Financial Performance
Discounts
Market Conditions
Growth Potential
How does a business valuation support long-term estate planning goals?
When planning for the future, it's important to align your business valuation with long-term estate planning goals. A well-structured valuation helps ensure the following:
Trusted Expertise for Business Valuations in Estate Planning
At BizWorth, we offer trusted expertise in providing certified appraisals that meet the rigorous standards required for estate settlement, IRS gifting, and family business transfers.
Our team of certified appraisers ensures your business valuation is precise, reliable, and compliant with federal estate tax regulations, making us the go-to choice for estate planning.
With our experience in handling complex valuations, we provide the confidence and clarity you need for smooth wealth transfer and estate planning.
Your Estate Planning Business Valuation Team
Our certified appraisers adhere to the highest standards, including the Uniform Standards of Professional Appraisal Practice (USPAP). By following these strict guidelines, we ensure that our valuations are accurate, reliable, and can withstand scrutiny during estate planning and tax assessments.
BizWorth is here to help
When it comes to estate planning, having an accurate business valuation is essential. BizWorth is here to guide you through the process. Simply click the green "Get an Instant Quote" button below to take the next step in securing your family's financial future.
Get an Instant QuoteAdditional Services
Let us help you achieve a precise and defensible valuation for your business. Get an online quote today!
Frequently asked questions
The cost of a business valuation can vary widely based on the complexity of the business, the purpose of the valuation, and the level of detail required. For most small businesses, costs can range from a $1-3k for buying and selling a business and $7-10k for estate planning, divorce and legal disputes.
Business valuations are typically performed by professional business appraisers who have specialized training and certification. These professionals are certified valuation analysts (CVAs), or certified public accountants who are accredited in business valuation (ABV). Professionals with an Accredited in Business Valuation (ABV) and Accredited Senior Appraiser (ASA) designation are also trustworthy sources of a business valuation.
IMPORTANT: If you are receiving an appraisal from an algorithm or anyone who does not have these credentials, chances are you are receiving a ballpark estimate or personal opinion rather than an actual business valuation or business appraisal. These estimates can be anywhere between 15-30% off the actual value of your business so be sure to only use these estimates for initial planning considerations but do not use these estimates for decisions that could cost you time or money.
A business valuation for estate planning assesses the fair market value of your business, helping to distribute assets and minimize tax liabilities when transferring ownership or wealth.
A business valuation ensures an accurate representation of your business's worth, which is essential for effective wealth transfer, minimizing estate taxes, and ensuring fair distribution among heirs.
Key factors include your business’s financial performance, tangible and intangible assets, market conditions, and future growth potential. These elements help determine the overall value for estate planning.
A comprehensive business valuation helps accurately determine the estate tax obligations based on the fair market value of the business, potentially reducing your tax liabilities through strategic planning.
Typically, the valuation process and report takes four weeks or less to produce once we receive all requested information.
Yes, a clear and accurate valuation can help prevent conflicts by ensuring that all parties understand the value of the business, promoting a fair distribution of assets.
Absolutely. We specialize in valuing family-owned businesses to assist with succession planning, ensuring a smooth transition of ownership across generations.
Typically, financial statements such as profit and loss statements, balance sheets, tax returns, year -to-date financial statements, and a trailing 12-month profit and loss statement are required for a thorough valuation.
It is generally recommended to update your business valuation every 2 to 3 years or when significant changes occur within the business, such as growth, acquisition, or leadership changes.
Yes, BizWorth's certified appraisers can provide expert witness testimony in legal disputes to support the accuracy and fairness of our business valuations.
