Business Valuation Services
With some of the best business valuation services in the United States, Dreamrunner Consulting can customize our services to meet your business valuation needs. Whether you need a full in-depth analysis that you can take to court, or you just need a rough idea to help you with negotiations, our business valuation service offerings can help you make better decisions.
What is a business valuation?
Business valuation is determining the value of, or an owner's interest in, a business. This is accomplished through a process and set of procedures used to estimate the economic value the business. A business valuation is typically used to determine the price one is willing to pay (or receive) to execute the sale of a business.
Most business owners across the United States may not necessarily know what their company, or a share of their company is worth. The short method is, whatever someone is willing to pay for it. But is there a way to know what it's worth without putting it up for sale? The answer is "Yes." This is where Dreamrunner Consulting can help. Our business appraisal expertise can help you know what your business is worth and help you make decisions to get the best out of the situation you find yourself in.
Do you know what your business is worth?
You might think you have a rough idea of what your business is worth but understanding the complexities of business valuation services can be daunting. We can help you understand value in all the various situations in which you could find yourself and what makes sense to navigate your circumstances going forward. Our business appraisal expertise combined with our track record with small business valuations fosters unwavering confidence in our clients. We have performed business valuations in a wide variety of settings.
Dreamrunner Consulting Business Valuation Services include:
The 409(a) in 409(a) valuations refers to the subsection of the U.S. Federal Tax Code that deals with "non-qualified deferred compensation". One area of concern in early drafts of 409A was the impact on companies with stock that is not readily tradable on an established securities market and these companies' employees. Since options often vest and become taxable more than 1 year after they are granted, it would seem that 409A would apply to this as a form of deferred compensation.
However, 409A specifically does not apply to incentive stock options (ISOs) and non-qualified stock options (NSOs) granted at fair market value. But, if a company issues options to a service provider at a valuation below fair market value, section 409A will apply. The fair market value of an option on common stock is defined as the fair market value of the common stock (the underlying security) on the date of issuance. The valuation of common stock, then, becomes critical. The code also provides a couple of ways for companies to achieve a safe harbor valuation, one of the easiest of which to complete is by securing an independent appraisal.
In the event of a disaster, such as a fire or a natural disaster, business interruption insurance replaces lost income. A policy will often provide reimbursement for: profits that would have been earned if the event had not occurred, fixed costs, moving to and from a temporary business location, payroll/wages if the company cannot operate, tax coverage, and other costs and expenses. (It is important to note that the types and coverages available are dictated by the insurance policy and, absent litigation or other types of claims, the insurance company ultimately decides what is covered and what is not.) Claims for reimbursements are identified by calculating the difference between projected net income and actual income, adjusting for fixed expenses.
Our team of professionals can help you analyze time, quantity, and value variables under business interruption claims to ensure proper procedures are followed for both insurance companies and those insured. We provide our expertise in valuing business interruption and lost profit claims to help resolve problems caused by any disaster your business or client might face.
The process of evaluating a business sale or purchase transaction may necessitate an examination at each step of the transaction. Before any formal agreements have been made, due diligence should be performed by investigating business operations and financial statements. Following a thorough evaluation of the business, terms of the purchase agreement will be negotiated. This negotiation includes analysis of the valuation of the business, which can be found utilizing several valuation approaches.
Our team has the skills and experience to help you navigate the due diligence phase as well as the valuation negotiations. If you are planning on purchasing or selling a business, we are dedicated and qualified to help you complete the due diligence you need to perform, as well as help you understand, prepare, and negotiate the value of the business.
Complex securities valuations require a sophisticated understanding of accounting and financial valuation techniques. These mathematical approaches may be used to value early-stage companies, derivatives and hedging instruments, and other securities. Our team understands the requirements and expectations associated with valuing complex securities. We assist clients in a wide variety of arrangements relating to share-based payments, early or development-stage companies, hedging instruments, and other hard to value securities.
We determine appropriate fair value estimates using the most appropriate valuation methods. Our valuation specialists have the skills and experience to navigate complex securities utilizing various valuation methods.
When business partners or major shareholders are unable to continue business together, they may need to dissolve their business, terminating their business relationship. A corporate or partnership dissolution may require complex negotiations, often relating to the division of business property, ownership of on-going projects, and the assumption of liabilities. In the worst case scenario, litigation may be required in order to complete the dissolution process.
Our valuation specialists have the expertise to navigate complex corporate/partnership dissolutions, utilizing various valuation methods to estimate fair market value. In addition, we have helped multiple clients in the litigation process, assisting to advise counsel and courts regarding the value of the business and any other related accounting and fairness issues involved in such litigation.
A corporate recapitalization is the reorganization of a corporation's capital structure as a strategy to stabilize or optimize a company's capital structure. This process involves exchanging debt for equity or equity for debt to best suit a company's financial goals. Restructuring a corporation can help raise capital by changing debt to provide additional leverage or equity by issuing new shares. In addition to changing the capital structure of a company, corporate recapitalization can change how much interest companies are paying on their debt securities, a company's risk level, and the financial burden on a company.
Corporate recapitalization is a key component in enabling your company to achieve the optimal capital structure by aligning the company's strategic goals with its financial positioning using a variety of debt and equity options. Our team has the professional training and experience to help you understand both the benefits and risks associated with a recapitalization transaction.
A donor-advised fund (DAF) is a charitable investment account where funds can be contributed with the intent to donate and support charitable organizations. Once donors make charitable contributions, they immediately receive tax benefits and recommend grants to qualified charities over time. The owner of the DAF may decide when and where to disperse funds.
Donor-advised funds are a fast-growing form of philanthropy, providing donors with flexibility in their giving options as well as potential tax benefits.
Prior to executing a transaction, due diligence is necessary to making informed decisions. It requires an in-depth examination of a company, reviewing company documents, contracts, and tax returns as well as interviewing company auditors and personnel. Due diligence is a particularly important step in any valuation and forensic accounting process as it ensures quality information is provided to parties involved in a transaction. It allows buyers to feel more comfortable about their expectations and reassures to seller's the fair market value of their company. Depending on what is found during this phase, it may lead to a re-negotiation of the purchase price to more favorable pricing or terms.
If you are seeking due diligence services for a transaction, investment opportunity, or any other verification process, allow our team of trained professionals to assist you.
Valuing a company in the startup or early-development stage requires deep financial understanding and expertise. New ventures are difficult to value as they typically do not generate income at the same capacity an established company might. These differences require alternate valuation methods to estimate an accurate value.
Our team recognizes early-stage business limitations and is equipped with the financial tools and methods to determine value in such situations. We understand the challenges of valuing a new venture, and we are equipped with the expertise and experience to assist you.
Fair value accounting refers to the practice of measuring assets and liabilities at a value that reflects what the asset or liability might be sold for as of the date of the financial statements. Calculating the fair value of an asset or liability may require an analysis of profit margins, future growth, and potential risk.
Fair value accounting provides accurate valuations, actual measures of income, and can be used to value a variety of assets and liabilities. With experience performing numerous appraisals in compliance with fair value accounting standards, our team is qualified to help you.
Gift and estate planning is the process that arranges the transfer of assets, typically in anticipation of death. These assets often include real estate, vehicles, bank accounts, and household items. Utilizing gifting as an estate planning tool requires a lot of preparation, especially when looking to reduce as much estate related taxation as possible. In particular, when gifting interests in a business or business assets, a business valuation may be necessary to report the value of the gift or estate to the IRS.
Gift and estate planning aims to maximize the amount of wealth for the intended beneficiaries, taking into consideration federal and state laws. Understanding the fair market value of an estate is a vital step in the gift and estate planning process.
Intangible assets, under US GAAP, are assets that lack physical substance. These include brand names, customer lists, distributor relationships, software, and intellectual properties such as patents, copyrights, trademarks, and trade secrets. Determining the value of an intangible asset is difficult as such assets are hard to price. Many intangible assets do not generate income, are not easily converted to cash, or do not have a recent sales price that can be used to assign fair market value.
The process required to estimate the value of intangible assets makes it critical to hire an experienced valuation expert. Dreamrunner has the experience and expertise to produce accurate intangible asset valuations.
Intellectual property is defined as a set of intangible assets owned and protected by the company from outside use or implementation without consent. They are legally protected so others are not able to replicate the effects that should only benefit the owner of the asset. These assets include patents, copyrights, trademarks, and trade secrets. Companies protect intellectual property because of its high value and the competitive advantages it offers. With an increase of intellectual-based assets in the economy, there is an increased demand for intellectual property and the benefits they provide.
The process required to estimate the value of intellectual property makes it critical to hire an experienced valuation expert. Dreamrunner has the experience and expertise to produce accurate intangible asset valuations.
Companies merge with or acquire other companies as a business strategy to combine resources, diversify products, reduce risk and competition, and increase profit. For a buyer and seller to agree on a transaction price, a detailed calculation of the value of each company is required for the merger or acquisition analysis. This analysis includes key valuation data, like goodwill, transaction costs, and synergies to establish value. Goodwill is an intangible asset that exceeds a company's assets minus their liabilities. It provides revenue generation benefits that are difficult to measure.
In a merger or acquisition, it is necessary that goodwill is considered when valuing a company. In addition to goodwill, there is value created through synergies; the merging of two companies creates value that would otherwise be impossible to create independently. These synergies may be recognized in a variety of ways, including additional revenues, increased occupational capacities, or cost savings. Valuing goodwill, synergies, and other complex components of each company is essential to the merger or acquisition process and requires experienced valuation experts.
Monte Carlo simulations are mathematical algorithms used to measure and understand risk and uncertainty in forecasting models. The simulation uses random probability distributions for a variety of factors to simulate real life scenarios. These simulations are often used as a tool for budgeting, portfolio management, and financial planning, as they can analyze the impact of risk in prediction and forecasting models by providing a range of possibilities.
Monte Carlo simulations are also used as a valuation tool to determine value when a large range of probabilities are possible. Our valuation specialists can use the Monte Carlo simulation as a method to assess risk and evaluate assets.
Every business needs funding to operate and raise revenues, and sometimes, when dealing with the Small Business Administration (SBA), a valuation may be necessary in order to help get the desired loan.
If you need a business valuation to assist with obtaining funding, contact us to discuss how we can help you through this process.
Marriage is considered a legal contract between two parties, representing a lifetime commitment with rights and responsibilities for each of the parties. Before marriage, couples may prepare a prenuptial agreement, a contract specifying the assets and liabilities that each party brings into the marriage and determines property rights throughout the marriage and in the case of a divorce, separation, or death. There are many reasons couples may get a prenuptial agreement, as a prenup helps establish a fair division of assets and protect private wealth. During the preparation of the prenuptial agreement, hiring a forensic accountant to help establish the property rights or the value of a business at the time of the marriage is strongly recommended.
Even with a prenuptial agreement, navigating divorce can be financially and legally complicated, especially when dividing up real estate, a family-owned business, and other assets. It takes careful planning and adequate assistance from a forensic accountant to quickly recognize and resolve issues relating to financial assets that commonly occur in a divorce proceeding.
Purchase price allocation is an application of accounting for the values of the various assets, including goodwill, in the case of an acquisition, when one company purchases most or all of another company. The purchase price is the sum of fair market value of a company's assets and liabilities and goodwill. Goodwill is an intangible asset that captures the value of synergies and a control premium in an acquisition.
Valuing assets and goodwill at fair value is essential to booking assets and liabilities at the appropriate amounts at the time of the transactions. Our valuation specialists have experience performing purchase price allocations that pass the audit process with flying colors.
Stock options are sometimes used by companies as a form of employee compensation, and they provide a way to align an employee's interests with those of shareholders and management. Stock options should be valued when they are granted for accounting and taxation purposes.
There are several valuation methods for fair valuation of employee stock options: Black Scholes formula, Binomial Model, and the Monte Carlo Method. Our team understands and has experience performing valuations under the rules established by the IRS for each of these valuation techniques.
Trade secrets are a form of intellectual property that derives economic value because they are not known or accessible to competitors. Well-known trade secrets include things such as the Coca-Cola formula, the ingredients in WD-40, or the herbs and spices in KFC's chicken. Unlike patents, trade secrets are not filed with the government, so the responsibility of keeping the trade a secret lies within a company. These secrets create value within a company and the owner of the secret can enforce rights if someone steals or discloses the information.
The most effective way to protect trade secrets is through the use of non-compete or nondisclosure agreements. From time to time, it also may be necessary to value trade secrets for various reasons. Our team is qualified to determine the value of your company's trade secret asset considering all costs, benefits, and risks associated with the secret.
Regardless of the circumstances you face, we have the expertise to help you find the right solution and provide timely and accurate information to help you make critical business decisions. Since each valuation situation is unique, contact us today to discuss how we can help.