MK Appraisal Group – Business Valuation Services

MK Appraisal Group provides quality-level business appraisals of businesses, business ownership interests, debt and equity securities, intangible assets and intellectual properties, and special purpose properties. We routinely perform these valuations for the following purposes:

  • Tax & Estate Planning Valuations (IRC 2701/2702)
  • Financial Reporting “Fair Value” Opinions
    • ASC 718 (formerly FAS123R) – Stock Compensation
    • ASC 805 (FAS141R) – Business Combinations: Purchase Allocations
    • ASC 350 (FAS142) Goodwill and Other Intangibles: Impairment Testing
    • ASC 815 (FAS 133) Derivatives and Financial Instruments
  • IRC 409A Equity Stock Compensation Opinions– quality-level appraisal services pricing
  • Ad-Valorem Tax Valuation
  • Management Information and Corporate Planning
  • Marital Dissolution Appraisals
  • Litigation Support
  • Buy-Sell Agreement Valuations & Consulting

Estate and Gift Taxes

MK assists taxpayers and their advisors with planning for treatment of estate and gift taxes. MK’s gift and estate tax-related services include business enterprise valuations, capital stock valuations, and intangible-asset valuations. In most cases, the estate plan will involve the transfer of a significant assets from one generation to the next, typically over a period of time. If closely-held business interests or interests in family limited partnerships (FLPs) are transferred, the valuation of such assets determines (a) what percentage may be transferred in a tax efficient manner and (b) the amount of potential tax liability. Because such transfers are subject to increased scrutiny by the Internal Revenue Service, a thoroughly documented, well reasoned valuation is critical to establishing a supportable position.

It is the burden of the taxpayer to support the values utilized for estate and gift tax returns. Values transferred must be at fair market value as defined by the Internal Revenue Service. MK’s qualified appraisals render a fair market value opinion that meets all of the IRS standards including Revenue Ruling 59-60. We maintain compliance with leading gift tax codes, notably IRC 2701 and 2702. We can also provide retrospective studies to establish the tax effect of divestitures, together with audit support and testimony.

MK’s Estate and Gift Tax valuation services can be used in the following instances:

  • Estate Tax Planning & Compliance
  • Gift Tax Planning & Compliance
  • Fractional Interest Valuation – (Tenant-in-Common Interests)
  • Sales of interests to Family Members
  • Intellectual Property Transfers or Sales
  • Stock Options, Warrants and other equity interests
  • Non-Voting Stock of S Corporations
  • Sales to a GRAT or Intentionally Defective Trust
  • Valuation for Life Insurance /Key Man Planning and Funding
  • Valuation for the transfer of Family Limited Partnerships (FLP’s) or LLC’s
  • Valuation of minority interest in a family controlled enterprise
  • Preferred Stock, Convertible Preferred Stock securities
  • Debt Instruments issued by Private Companies

“Fair Value” Financial Reporting Valuation – SEC Compliance Services

MK has been providing FV services to small and mid-cap plus private companies for over 13 years and has helped over fifty public companies transition into proper valuation compliance with ever-changing Fair Value requirements. Our Fair Value appraisal services provide you with high-quality, reliable and thorough value opinions.

Historically considered a nuisance by many, financial reporting appraisals (accounting compliance valuations) are viewed today as a key element to delivering the transparency and independence that the investing public and management now demand. A qualified independent appraisal expert provides peace of mind to clients complying with SEC rules changes, FASB/AICPA interpretations, Codification transitions, and stringent audit requirements.

As an industry veteran, MK Appraisal Group has witnessed the heightened regulatory efforts and has assisted many clients making the transition to new merger and acquisition accounting rules under FAS-141 & 142, the emerging Codification standards and the expansion of Fair Value measurements into ever larger sections of the company’s balance sheet. I understand the regulatory landscape, the demands of audit reviewers and the requests often made by regulators and government agencies. My appraisal work stands-up very well under increasingly rigorous third-party reviews.
The Valuation of Derivatives……… never Easy

ASC 815 (formerly FAS 133), Accounting for Derivative Instruments and Hedging Activities, provides guidance on the specific accounting treatment of a multitude of derivative instruments, including convertible debt or warrants. The valuation of these derivative instruments can be complex and often requires advanced valuation techniques to calculate their embedded features, including the use of lattice models and other statistical tools. MK has experience in the modeling of complex securities and can provide an independent valuation in support of financial reporting requirements.

Tax valuation and IRC 409A – to later-stage & pre-exit Companies.

Eight-years time has elapsed since the passage of the American Jobs Creation Act of 2004 and new section 409A of the Internal Revenue Code was introduced to a mostly irritated deferred-compensation society; and in that time the world of venture-backed and other private companies has suffered though a great-recession, has struggled with “down-rounds” and “no-rounds”, and relatively few exits in its effort to “right-size and find equilibrium”. And where the independent-appraisal-presumption has been selected; service providers have emerged from all corners, nooks and crannies – ready and willing to serve. In fact, the emergence of service providers and vendors of IRC-409a appraisal services is unprecedented in my view.

Despite the apparent decline in quality for IRC-409a valuation, the Service has not revised its IRS requirement one bit. An unqualified “analysis” is not a viable alternative to a qualified, thorough quality-based “appraisal”. MK’s IRC-409a valuation service offerings are presented to the CFO who seeks a higher-level solution – one that stands-up nicely to auditor scrutiny if needed and one that will survive any future IRS challenge. I do this 409a thing differently: right the first time, thorough each time and never cheap any time.

When the choice is to pursue the independent-appraisal- presumption, a decision is made: to comply with the IRS’s requirements. Some companies are also subject to GAAP compliance if and when the valuation result is to be utilized for financial reporting compliance under ASC-718 (formerly FAS-123r). Please contact me at any time to discuss these unique differences between IRC409a and ASC-718 requirements for the appraisals.

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