When Do You Need a Valuation?

A valuation is often required at pivotal moments in a company’s lifecycle. Whether planning for succession, pursuing a merger or acquisition, or resolving disputes, understanding a company’s true value is essential to making informed decisions.

A credible valuation provides a foundation for negotiation, supports compliance with regulatory standards, and promotes fairness among stakeholders. Engaging a qualified, independent appraiser brings objectivity and expertise to even the most complex scenarios.

Succession Planning

A valuation plays a key role in succession planning for many business owners. It offers a clear picture of the company’s worth to help reduce confusion, minimize disputes, and guide ownership transitions—particularly in blended or multi-generational families where family interests may not be aligned. A sound and thorough valuation assists in supporting a clear succession plan.

Succession planning often demands a careful analysis of value, especially for family-owned enterprises that wish to transition ownership to the next generation or to key employees. A well-supported valuation helps all parties agree on terms that reflect economic reality and minimize future disputes.

Transaction Support

When investors or private equity groups consider investing in a mature, family-owned business, a valuation is essential. Valuations are vital during major transactions, such as mergers, acquisitions, or capital investments, but also play an ongoing role in the operational and strategic planning of a business. They provide clarity for investors, private equity groups, and lenders who rely on accurate independent analyses of value.

Companies also benefit from valuations when assessing borrowing capacity for expansion, attracting new investors who require independent assurance of value, or implementing equity-based compensation plans. Credible valuations help leadership make confident, data-driven decisions that support strategic growth and compliance with accounting and tax regulations.

Litigation

In legal disputes, valuations serve as guidelines for equitable resolutions. Whether in shareholder disagreements, divorce proceedings, or estate matters, a defensible valuation provides a factual basis for settlement. These engagements often require specialized knowledge of accounting, industry standards, market dynamics, and ownership structures. A skilled appraiser interprets complex documentation, analyzes historical performance, and applies multiple methodologies to support conclusions that withstand legal scrutiny in court and build trust among all parties involved in the negotiations.

The same level of precision is essential when regulatory or tax obligations play a role in the valuation. Whether a business’s stated value is challenged, or it must comply with specific statutes, retaining experienced valuation professionals who bring objectivity and documentation needed to support a fair outcome. Reliable, well-supported valuations serve as the backbone of legal decisions, providing clarity, confidence, and credibility in even the most complex circumstances.

IRS Compliance and Financial Reporting

Valuations also play a critical role in meeting IRS tax requirements and financial reporting guidelines. Compliance demands more than technical precision—it requires a deep understanding of the fair market value principles and increasingly complex regulatory changes. Whether determining fair market value for estate and gift tax or substantiating transaction pricing for IRS review, accuracy and documentation are essential in protecting the interests of business owners and stakeholders.

Valuations performed under the Accounting Standards Codification (ASC) framework—such as ASC 820 (Fair Value Measurement), ASC 805 (Business Combinations), and ASC 350 (Intangibles – Goodwill and Other)—must meet rigorous financial reporting standards. Whether for purchase price allocations, impairment testing, or stock-based compensation, the objective is to produce reliable analyses that are technically sound, withstand audit scrutiny, and satisfy the expectations of regulators and stakeholders alike.

Collaboration with auditors, legal counsel, and management teams throughout any engagement fosters mutual understanding, resolves ambiguities, streamlines the reporting process, and establishes regulatory compliance.

Turning Valuations into Strategic Insight.

A well-executed and expertly conducted valuation serves as more than a compliance requirement—it is a strategic tool that drives informed business decisions, establishes long-term planning, and builds trust among investors, regulators, and employees. By combining financial expertise, industry insight, and objective analysis, EisnerAmper’s valuation professionals deliver the clarity organizations need to navigate uncertainty and seize new opportunities.

Contact our Valuation team to discuss how we can help you determine the value of your business and make informed decisions at every stage of its lifecycle.