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While the most common reason to value a professional practice
or business is to plan for a sale, there are many reasons to
seek valuation services. Valuation is frequently required in
practice situations such as partnership formations, partnership
dissolutions, buy/sell agreements, buy-ins, leveraged buyouts,
mergers, fairness opinions, bankruptcy proceedings, and estate
and gift tax planning. Also, employee stock ownership plans
must be valued annually to meet ERISA and IRS requirements.
There are many reasons to hire a professional appraiser. A valuation
conducted by a professional appraiser provides both owners and
third parties with a fair and impartial opinion of the value
of the practice or business. Since the professional appraiser
is accredited by the American Society of Appraisers, he or she
is kept abreast of changes in appraisal theory and techniques
and must meet stringent continuing education requirements. As
a result, the professional appraiser is more aware of current
conditions or changes in financial markets, economics, accounting,
and legal procedures and rulings.
Valuations typically take six to eight weeks to complete. After
some brief communication to establish your needs, BM&H will
issue an engagement letter, outlining services to be provided
and the estimated fees. Included with this letter will be an
extensive list of information which BM&H will need in order
to complete the valuation. Typically, these items include tax
returns, financial statements, depreciation schedules and other
necessary information. After being retained and receiving a
majority of the information requested, BM&H will conduct an
on-site visit to the practice being valued and will interview
the owner. BM&H will then continue the analysis, reach an opinion
of value and issue an extensive report to support that opinion.
The professional valuation report is a very powerful tool for
the client.
Unfortunately, there are times when litigation may call for
a professional practice or business to be valued. The most common
litigation is in connection with divorce proceedings. Another
type involves loss of profit or economic damages resulting from
physical or financial injury. Other litigation involves dissenting
shareholder suits, typically triggered by a minority shareholder
who feels that his or her rights have been substantially abused.
To schedule a no-obligation telephone consultation with Mr.
Hill, contact his assistant, Erica
Flory at (704) 424-5626. |
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