Services for Business Valuation
International Development Services’ Business Valuation was established by professionals who, while having an extensive background in accounting, their primary focus has become valuation services.
A couple of decades ago, the accepted standard for valuations was based on asset accounting–this constituted the majority of the market value of a company. However, much has changed and now it only represents about 25 percent. Here’s the reason for the change: the traditional accounting methods overlooked many intangibles, which add value, as well as most of the intellectual capital.
International Development Services’ Business Valuation personnel recognized that historical accounting methods are a reflection of the past, not the present, or the future of a business. The prevailing view of traditional accounting was formulated when companies generated their value through tangible assets, such as equipment, real estate, machinery, or the use of raw materials into the manufacturing of a commercial product. In our modern economy, which is more knowledge-based, businesses are creating value from intangibles which include proprietary methods, systems, brands, and specialized knowledge or unique relationships. While traditional accounting practices have done well to engender public trust, many of these accounting practices are found to be out of date, when viewed in light of the realities of businesses operating now.
Business Valuation looks to quantify the unseen value of the business. The real value of an enterprise is not simply a mathematical equation to subtract its liabilities from its assets. That elementary sum merely shows the accounting value. It fails to show the real value, when taking into account the true economic worth of the business. A Business Valuation must take into account both tangible assets AND intangibles, such as intellectual property, brand value, reputation, and goodwill in the marketplace. As an example, the value of human capital is almost impossible to assess in dollars. While we might possibly try to speculate on the generation of future cash flow, this might be considered unreliable based upon the common trend of using the more stringent accounting standards for intangibles. However, professional valuation standards do require that we consider such.
The Valuation Needs of Your Unique Business
Why is a valuation important? When it comes to proper tax planning and developing what is the best plan for exiting the business, a business valuation is vital.
It is not simple or easy to determine what the true value of an enterprise actually is. Additionally, preserving the value is of the utmost importance and not always easily achievable. It is prudent to only rely upon professionals who have the requisite credentials and experience. You need to have a person who has a broad knowledge of business valuations as set forth by the Internal Revenue code, federal and state law, Department of the Treasury regulations, and the legal impact of judicial decisions. A true valuation requires the ability of a valuation expert to identify the hidden value intrinsic to the business and then have the expertise to quantify its value with the certainty that the law requires.
Let our expertise, professionalism, and experience provide you the result you need. We will provide you a professional valuation with the quality needed to withstand the scrutiny of the IRS. Our valuations, moreover, are not simply something to aggregate your wealth; our valuations are legally defensible.
While it has often been stated that the best defense is a strong offense, when it comes to dealing with the IRS, no truer words can be spoken!
