World Class Mergers & Acquisitions  |  For Companies $5 Million to $250 Million in Revenue

Mergers & Acquisition FAQ – December 2012

Q: I have a business which I would like to establish a value for.  Is there a commonly used formula or multiple I can use in order to value my business?

A: Quite simply, there is no easy way under the Internal Revenue Code or literature available to value a business in a proper manner using a simple multiple of revenue or formula.  While there are various methods to value a business, qualitative factors must be considered along with the quantitative.  If you are having your business appraised, it is best to deal with a trained professional to get a number where the business can be sold or valued for estate tax purposes depending on your situation.

Q: If I have the desire to bring my children into the business, is there any course of action that is recommended?

A: The answer to this question is that no one course of action fits all situations.  As a general rule, engaging the successors in the business and having them take business courses and technical courses is never a bad idea.  At any rate, challenging, testing, and grooming them is a much better endeavor than a walk-in type succession.

Q: What is the latest news with the estate and gift tax exemption?

A: The latest consensus is that Congress and the President will either avoid The Fiscal Cliff or shortly after January 1, 2013 arrive at n agreement.  We do not expect a decreased estate and gift tax exemption.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors