Independent, Third-Party Business Valuations
If a client wishes to establish the market value of their business they may inquire about a business valuation. It may arise, for instance, when they are considering selling the business, issuing shares to key employees, restructuring their affairs or engaging in next-generation planning. Alternatively, an independent valuation may be required to settle a shareholder dispute or for grant-of-probate purposes.
In the majority, if not all, of these cases, there are tax implications. Therefore, an incorrect or unsubstantiated valuation, detected through a subsequent audit, intervention or aspect query, may lead to Revenue imposing tax, interest and penalties.
In the event of a Revenue intervention, it is vital that a formal valuation exists to support the value placed on the business – and, in such cases, an independent valuation is usually perceived to be stronger than a valuation performed by the client’s own tax advisors.
Likewise, new shareholders coming into a business may perceive the company’s own accountant to be biased towards existing shareholders and may look for a valuation from an independent party.