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Certified Valuation Service

 
This is our comprehensive business valuation service. It is fully compliant with IRS Revenue Ruling 59-60 and the Uniform Standards of Professional Appraisal Practice (USPAP). This is the appropriate service for any IRS-related filings, such as gift tax returns, estate tax returns, sales of private company stock to related parties, election of S corporation status. This level of valuation service has also become the de facto standard for use in litigation over the value of a company’s stock. The valuation result is based upon a review of the three widely accepted valuation methodologies. Our Chief Valuation Officer reviews the valuation results, and signs the valuation report.
 
IRS Revenue Ruling 59-60 Compliant
 
The Internal Revenue Service Revenue Ruling 59-60 sets out the standards for valuations that are submitted to the IRS for estate and gift tax returns. The basic requirements are that:

  1. The valuation analyst must review the recent financial history of the business.
  2. Unless there is a very comparable market comparable valuation result available for use, the valuation analyst should use at least two methods to value the business.
  3. The valuation analyst should use his/her judgment about how to weigh the multiple results to get a final number.

 
Service Details
 
Valuation Method:
 
The Discounted Free Cash Flow method and Private or Public company Market Comparables for Revenue and EBIDTA where available are appropriate for the analysis.
 
Valuation Results:
 

  • – Total Fair Market Value (includes Control Premium and Liquidity Discount)
  • – Minority Value (Value of Ownership Equity without Control Premium)
  • – Total Fair Market Value and Total Minority Value Per Share

 
Information Request:
 

  • – Stockholder agreement and buy-sell agreement (if available)
  • – Up to five years of business tax returns and financial statements
  • – Company marketing brochures, price lists, catalogs, and/or company website URL
  • – Organization chart and management roles and responsibilities (where already prepared)
  • – List of major customers by sales
  • – Company business plans, projections of future revenue and earnings (where already prepared)
  • – Previous business, equipment, or property valuations or offers to purchase

 
Valuation Interview:
 
Axiom Valuation staff conducts a preliminary review of the company information and then schedules an interview with the client or the client’s designated representative. The valuation interview topics include:
 

  • – Review of the company’s history, corporate documents, and most recent five-year financial performance
  • – Review of company’s operating and non-operating assets
  • – Determination of the appropriate NAICS/SIC code industry designation(s) for the company’s line(s) of business
  • – Review of economic, regional, and industry factors impacting the company
  • – Review of how the company sells its products or services, key customers, and competitors
  • – Review of existing business plan projections, if any, and determination of a reasonable projection for revenue and profit growth
  • – Discussion of company’s long-term competitive advantage
  • – Review of owner discretionary expenses and possible non-recurring expense or revenue items
  • – Review of firm-specific risks, including customer concentration, supplier reliance, and key person reliance
  • – Review of comparable company sales in this industry
  •  

The objective of this review is to finalize the inputs and key assumptions to use in developing our preliminary valuation results and preparing a draft report.
 
Draft Valuation Report:
 
Axiom Valuation e-mails the draft report to the client and/or the client’s designated representative, and then schedules a follow-up phone discussion.
 
Review:
 
A senior Axiom Valuation staff member discusses the draft results and conducts a Q&A session with the client and/or the client’s designated representative. Any necessary corrections are made in a timely manner.
 
Business Valuation Report:
 
The Certified Valuation report is 60+ pages long. We provide two hard-copy Business Valuation Reports in customized binders as well as an electronic version of the report in an Adobe Acrobat PDF file.
 
Additional Questions:
 
Phone support for questions after final report delivery is included in this service.
 
Updates:
 
A certified update service is available at a reduced price, for businesses where there have been no material changes in markets served or comparable companies since the last Axiom Valuation certified valuation. Please contact us for a quote.



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