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J.L. Pierson & Co. LLC Business Valuation

BUSINESS VALUATION FOR CORPORATE PLANNING

Yes, several clients have recently asked JLP&Co.LLC to value their mid-market business without either a tax or a transaction purpose in mind ! In fact, we have enjoyed working with such businesses enormously because the process can provide management and the owners with the tools needed to support strategic decisions, and we like to help. Examples include support for corporate decisions which require an as-precise-as-possible assessment of value in the market place. They are: valuations in contemplation of sale, merger or divestiture, valuations for the purpose of drafting an appropriate Buy-Sell agreement between partners [it's never too late..] valuations for life insurance funding purposes, refinancing and recapitalizations.

Generally speaking, the standard of value used for corporate planning assignments can be, but is not necessarily Fair Market Value. The client must understand what alternative standards can be used, and here the investment standard - assuming a group of potential investors - is the most useful. Also generally, such appraisals make key assumptions which make sense to management, and in this sense, they are hypothetical as defined in USPAP. Often they lead to ranges of value in preference to a firm number. Again, all this is most important for the clients' board to support their decision-making. If the appraisal is hypothetical, then the work product or even drafts should be limited in distribution to the board and its designees. If the appraisal is discount-heavy such as situation where the partners may or may not wish to continue in business together, then the support of discounts may very well take up a significant amount of the billable time.



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J.L. PIERSON & CO. LLC
Business Valuation: NY, NJ, CT, ETC.

368 Heights Road #2392
Darien, CT 06820, U.S.A.
Voice: (203) 325-2703
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