Most business valuations are completed for various tax, financial reporting, and ESOP compliance purposes due to regulations set forth by the Internal Revenue Service, various states’ Departments of Revenue, the Department of Labor, the Securities and Exchange Commission, the Financial Accounting Standards Board, the International Accounting Standards Board, and other governmental agencies and oversight boards. The following is a partial list of situations requiring a company or stock valuation for various compliance-related purposes:

  • A shareholder is gifting shares to his or her heirs, or is selling shares of the company’s stock.
  • A business owner has passed away and a valuation is required to settle the estate.
  • A company with stock-based compensation needs to comply with IRC 409A and ASC 718.
  • A company (public or private) has acquired another company and needs to allocate the purchase price to all the tangible and intangible assets for financial reporting purposes in accordance with ASC 805.
  • A company has goodwill on its balance sheet and needs to test it for impairment so that its financial statements are issued in accordance with Generally Accepted Accounting Principles (GAAP).
  • A company has an employee stock ownership plan (ESOP) or incentive stock options.