Business Valuation Services
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About Grassi & Co. Grassi & Co. has considerable expertise, providing exceptional service and proactive advice to help you achieve your business objectives. Our dedicated team of professionals deeply cares about what they do. Day after day, they work intimately with clients to maximize their success, find strategic solutions to business challenges, and maximize their company’s potential. Let us help you reach the next level of success. Managed by CEO and Managing Partner, Louis C. Grassi, and an Executive Committee consisting of five additional senior Partners, Grassi & Co. has been serving the New York region for more than 30 years. With steady growth and an unwavering approach, our firm has developed into a team of over 200 professionals, each specifically trained to focus on your business. The firm has grown as our clients have grown, allowing us to become one of the Top 100 largest firms in the US according to Accounting Today and INSIDE Public Accounting, the 18th largest firm in New York according to Crain’s NY Business and the 7th largest firm in Long Island by Long Island Business News. In addition, INSIDE Public Accounting has ranked Grassi & Co. as one of the Nation’s Fastest Growing Firms as well as one of the country’s “Best of the Best” Firms. Grassi & Co. has also been ranked among the Best Places to Work in New York City by Crain’s NY Business and among the Best Companies to Work for in New York State by Best Companies Group.
Grassi & Co.’s Business Valuation Services Our Practice Grassi & Co.’s Valuation Practice includes members with significant experience in valuation engagements and whom hold professional credentials through various societies, including the American Institute of Certified Public Accountants (AICPA), the American Society of Appraisers (ASA), and the National Associations of Certified Valuators and Analysts. Many of our professionals also hold advanced degrees, publish on a regular basis and are active on a variety of valuation committees and societies. We leverage this experience and knowledge to share best practices with our clients and provide them with an unmatched level of service. Whether it is for financial reporting, tax compliance/planning or litigation purposes, establishing value can be a tax as well as an overall business necessity. Valuations are especially important for closely held corporations because the stock for these entities does not typically experience market activity. Grassi & Co.’s valuation service approach requires a multidimensional examination of the business, or security, to be valued and its environment. Our valuation consultants begin an engagement by obtaining background information on the security, the industry and general economic environment. In placing a value on either a going concern or a liquidation premise, there are many factors brought into play, both quantitative and qualitative. The factors to be used for determining value will depend upon the conditions surrounding the specific situation. There are different types of valuation reports that may be issued, depending on the particular circumstances of the engagement. The client’s need and the specific purpose and use of the valuation will determine the appropriate type of report to be issued. Our reports are tailored to the specific purpose and are compliant with relevant standards—including the fair value standard as promulgated by the Financial Accounting Standards Board (FASB), the Internal Revenue Code (IRC), the Uniform Standards of Professional Appraisal Practice (USPAP) or other regulatory bodies. The following summarizes several purposes for a valuation, lists the benefits of a valuation, and provides details on the various types of valuation reports.
How much is it worth? 4
Our Valuation Practice Team can help answer that question. 5
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Grassi & Co.’s Business Valuation Services Why is a Valuation Needed? Clients or their professional advisors may identify the need for a valuation for one of the following purposes: •
Estate, Inheritance and Gift Tax (Ownership Transfer)—Valuations of a closely held business are useful for estate planning, estate settlement, and IRS reporting of estate transactions. Valuations are also important to determine the amount of lifetime gifts. Inaccurate valuations can cause the IRS to challenge and overturn the estate plan, lead to lawsuits among heirs, and expose the estate to under valuation penalties. Recent changes in adequate disclosure regulations provide attaching an appraisal report to the return will allow the three-year statute of limitations to begin.
Subchapter S Elections—C corporations that elect subchapter S status generally require a business valuation to provide protection in the event that built-in gains tax is triggered within the ten-year waiting period subsequent to the election.
Charitable Contributions—The gift of stock of a closely held business to a charity may trigger the need for a valuation. The IRS requires supporting valuation documentation for gifts.
Employee Stock Ownership—A valuation is required by IRS and Department of Labor regulations.
Personal Financial Statements—A valuation may be necessary to represent the fair value of the assets of the owner for his personal financial statements.
Financing—Companies may obtain financing in which the collateral consists of closely held stock or intangible assets. A valuation provides the lending institution with documentation regarding the value of the collateral.
Mergers, Acquisitions, and Spinoffs—One company may acquire or be acquired by another. One or both of the companies may need to be valued to determine the fair transaction price.
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Grassi & Co.’s Business Valuation Services •
Allocation of Acquisition Price—When a business is acquired a valuation is needed to determine the allocation of purchase price to assets acquired for financial and tax reporting.
Goodwill Impairment—When a corporation has recorded goodwill, tests of impairment may be required by accounting guidance.
Issuing Stock—When a company is issuing stock or options to employees, a valuation is necessary to determine the market value of the grant.
Cross Purchase and Buy-Sell Agreements—Shareholders in a business may enter into a buysell agreement, which facilitates the exchange of shareholder interests in the event of death, disability, retirement or termination from the business. An initial valuation is needed plus a plan to update the valuation either through a formula, periodic revaluations, or a combination of the two.
Litigation—Attorneys rely on an expert’s valuation of a company in various instances including divorce, compensatory damage cases, and insurance claims.
Portfolio Valuations—Private equity or hedge funds often hold interests in un-traded securities, which need to be valued for financial reporting purposes.
Liquidation or Reorganizations—Valuations can be necessary for tax reporting, financial reporting, and distribution of assets.
Minority Shareholder Interests—Minority shareholders may request a valuation when they feel that a restructuring of the company is having a negative impact on their interests.
Value-Based Planning—Management may use the current value of a business to analyze the effect that various management decisions could have on the value to determine which course of action to pursue.
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Grassi & Co. Services Practice
Types of Business Valuation Reports
Grassi & Co.’s Business Valuation Services Depending on the purpose of the valuation and the intended distribution of the report, valuation reports can be divided into one of the four following categories: •
Appraisal or Valuation Report—A comprehensive report that can be provided to third parties. The objective of an Appraisal or Valuation Report is to express an unambiguous opinion on the value of a business, business ownership interest, or a security in a comprehensive narrative format. All the procedures that the appraiser deems relevant to the valuation will be performed. The report provides a logical progression for clear communication of pertinent information, valuation methods, and conclusions. This would include: full description of the nature and history of the business, general economic outlook, industry outlook, financial statement analysis, valuation methodology, methods considered but not used, valuation analysis, and conclusion. An Appraisal or Valuation Report is appropriate when the client requires an opinion of value.
Summary Report—Complete analysis with an abbreviated report for client use. The objective of a Summary Report is to express an unambiguous opinion on the value of a business, business ownership interest, or a security by performing all procedures that the appraiser deems relevant to the valuation. While the engagement procedures are substantively the same as for an Appraisal or Valuation Report, the format is shorter and there is considerably less material presented. A Summary Report includes the presentation of the valuation procedures followed, information considered, and the reasoning that supports the analyses and conclusions of value. A Summary Letter Report is appropriate when the client requires an opinion of value and the report is for limited use.
Calculations—An approximate indication of value, not a formal opinion of value. The objective of a calculation engagement is to provide an approximate indication of value based upon the performance of limited procedures agreed upon by the client and the person performing the engagement. No opinion of value is indicated and consequently, an appropriate disclaimer of value is included in our report. Calculations are appropriate in situations in which the client is interested in an estimate of the value of a security but is not necessary to issue an opinion.
Expert Testimony—Expert testimony is a form of oral report given in lieu of, or in addition to, a written report, in the form of testimony in a deposition and/or on the witness stand, before a court of proper jurisdiction or other trier of fact, supporting the valuation professional’s conclusion(s). Expert testimony has the following characteristics:
It may, but is not required to, be accompanied by a written report.
It includes a statement of a definite specific conclusion of value; or a reasonable range of values; or a preliminary estimate of value which must include a statement that a conclusion of value resulting from a formal (full) report may be different and that differences may be material.
Valuation work performed in connection with expert testimony must be performed on a basis of non-advocacy, including a statement that the valuation professional has no present or contemplated interest in the property valued. 9
Helping clients put the pieces together for more than 30 years
Client Testimonials “We selected Grassi & Co. as our accounting firm not only because of the commitment they make to their clients, but also because of their strong Industry experience and the extensive suite of services they provide. Grassi & Co. understands our industry and the challenges we face. Their expertise has helped us achieve our objectives—making them more than our accountants.” — Peter C., President and CEO
“Grassi & Co. has always been a pleasure to work with. We run most major business decisions by them and they have served as an excellent sounding board for us through the years. Their team is always going above and beyond, giving us sound, strategic business advice that has helped us save money on our taxes and secure favorable financing when needed.”— John B., Owner
“Grassi & Co. has been excellent as accountants and advisors to our business. We have worked with them for over 10 years. During this time they have provided wise counsel on various and diverse business matters. There is no doubt that this advice has saved us a significant amount of money.”— Frank S., CEO
“Grassi & Co. made it easy for me to realize the value they could bring to my business. Their knowledge and expertise within the sector has proven to be an asset to our company by helping us increase our efficiencies as well as achieving our business objectives.” — Frank I., Owner and CEO
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488 Madison Avenue New York, NY 10022 (212) 661-6166
50 Jericho Quadrangle Jericho, NY 11753 (516) 256-3500
10 Esquire Road New City, NY 10956 (845) 634-5300