FAQs

4. How do I get a business valuation project started?
NCBV conducts valuation projects only upon execution of a written engagement agreement, regardless of size of the engagement. This makes sure that both you and NCBV agree about the nature and scope of your project, which limits the possibility of future misunderstandings. The engagement agreement includes terms and conditions of the valuation services, fees, expected deliverables, and similar items. It will also spell out the information that the client is expected to provide in order for the project to proceed to successful completion.

5. I have an interest in a small business that needs to be valued for estate/gift tax purposes. Since this business is really small, can’t I just have my CPA write a short letter of valuation for the IRS? I really don’t want to pay for a “full blown” valuation report.
You certainly can do that, but it would put your tax filing at risk. Regardless of size of business, business valuations for estate and gift tax purposes generally must include discussion and analysis of multiple topics in the US Treasury’s Revenue Ruling 59-60. The level of detail in a report for a small business (and cost) is typically not the same as for a large business, but it must cover the Rev. Rul. 59-60 requirements. If the person conducting your valuation is not familiar with these requirements or says they are unnecessary, you should look somewhere else, including NCBV, for your valuation.

6. I need a fractional interest valuation for estate/gift tax purposes. Can you also do my real estate appraisal?
No. NCBV is not a real estate appraisal firm. We will conduct a fractional interest valuation based upon a real estate appraisal completed by a qualified, professional real estate appraiser. For tax purposes, we cannot conduct a fractional interest valuation based on estimates, memos or summary letters by individuals who are unqualified or who are not professional, designated real estate appraisers. For non-tax purposes, NCBV may estimate fractional interest values based on other real estate data and/or reports, depending on their source.

7. My partner wants to buy me out of our partnership. We do/do not have a buy/sell arrangement. Can you give me an estimate of the value of my partnership share?
Yes. We can estimate the value of your partnership share whether you have or don’t have a buy/sell agreement. At minimum, we will need to review historical financial information and partnership documents.

8. I need a business valuation to come in at a minimum/maximum number or between a range of values. Can you do that?
No. NCBV, like other professional business valuation consultants, will never guarantee a certain estimated value for a business interest. NCBV proudly offers independent valuation services. We adhere to all NACVA professional and ethical standards.

9. I have been approached to sell my business. My business is not very old, but has grown quickly -- so I have limited historical financials. Can you still value it?
Yes. We can value based on your limited financials, future financials you can project separately or from your business plan, and other data that you have and that we may develop from third party sources. It is important to know who the potential buyer is, as that may have an impact upon fair market value due to possible business synergies the buyer may expect from acquiring your enterprise.

10. Can’t I just find a “rule of thumb” income or revenue multiple for my industry, and apply it to my business to get an accurate estimate of its value?
You could use a rule of thumb for a “back of the napkin” or “ballpark” value that helps with transaction negotiations or even discussion at your local pub. But, only in rare industries is a rule of thumb value dependable as a primary value indicator. Ask yourself the question – without knowing anything else about a business, would you buy it at a value based only on applying a single revenue or income multiple? For a valuation to be used for tax purposes or for larger, more complex businesses, relying on a rule of thumb multiple is simply not appropriate. Instead, other methods that consider the actual history of the business, its complete financials, its management, and other factors specific to it should be considered.

11. What about valuation fees?
NCBV fees are engagement specific. They are largely dependent on the nature, scope and purpose of your project. Generally, valuation reports will be subject to an overall fee set at the time of engagement, subject to change if, during the engagement, there are material changes to its scope or information arises that significantly changes its complexity and/or the time required to complete it. Consulting projects are usually based on an hourly fee rate. Fees for valuation services are never related to or contingent upon the valuation conclusion. Some projects may be based on an arrangement combining a minimum fee plus hourly fee rate, or a fee range between a minimum and maximum. Certain types of NCBV expenses may be recovered in addition to fees, depending on the nature of the project. For most valuation engagements, an initial retainer will be required to begin work on the project.

12. What about Exit Planning fees?
Fees for Exit Planning engagements depend on the size and complexity of the project. They may also consider the potential value added or savings projected from implementation of the Exit plan.

13. What valuation work do you not provide?
NCBV is not a real estate appraisal firm, and does not conduct real estate appraisals. We do not provide any valuation work in the context of marital disputes and dissolutions.

14. Do you always need financial information?
Generally, yes. On established businesses, depending on the purpose of the valuation, NCBV typically requires historical financial information (minimum income statements and balance sheet) and other relevant business data in order to conduct the valuation. On a new or proposed business, NCBV may be able to use prospective financial information, usually including projections and budgets.

15. What if I don’t want to release some information?
NCBV respects its clients’ wish to protect the security and non-disclosure of confidential business information, and takes steps to fulfill that desire. However, NCBV reserves the right to decline or cancel an engagement with a prospective or current client who refuses to provide financial information or other information that is available and that NCBV feels, in its judgment, is required or is reasonably necessary to properly conduct the valuation.