USA Valuation under NACVA Standards
We provide USA business valuation services to small businesses, startups, and companies for their taxation or regulatory purposes. We provide USA valuations as per National Association for Certified Valuation Analysts (NACVA) standards.
Before valuing a company, the valuer must establish the purpose of the valuation. Normally, there are four basic purposes for valuing a business: tax, litigation, transaction and regulatory.
The purpose of the valuation will affect the assumptions and methodologies used to determine value. NACVA valuation guidelines have laid down the detailed procedure for valuation.
There are many reasons to have a closely held business valued, including:
- Mergers and acquisitions
- Sales and divestitures
- Buy/sell agreements
- Fairness opinions
- Shareholder transactions
- Capital infusions
- Employee Stock Ownership Plans (ESOPs) 409A
- Employee benefit plans
- Expert testimony/litigation support
- Estate planning and taxation
- Gift taxes
- Solvency opinions
- Insolvency opinions
- Collateral valuations
- Purchase price allocations
- GAAP valuations under FAS 141 and/or FAS 142
- Charitable contributions
- Determination of net operating loss in bankruptcy
- Determination of liquidation value in bankruptcy
- S Corporation Elections—calculation of built-in gain per asset
- Marital dissolution
- Intangible Assets valuations.
NACVA guidelines specify a detailed Valuation Appraisal using various databases, applied various methods and financial analysis.
NACVA has prescribed following methods are used for business valuations:
- Cost Approach:
- Book Value Method
- Adjusted Net Asset Method
- Income Approach:
- Discounted Cash Flow
- Capitalisation Method
- Excess Earning Method (Combination of Income and Cost Approach)
- Market Approach:
- Guideline Public Company Method
- Comparable Private Transaction Method
- Dividend Paying Capacity Method
- Prior Sales of interest in the subject company
- Sanity Check:
- Justification of Purchase
- Rules of Thumb
This is not an exhaustive list of methods.