Business Valuation Methods

Some Basics on Value Measurements

As one of the top Albuquerque accounting firms, we find ourselves often confronted with questions of valuation. The different ways the IRS and other authorities value various assets are not always consistent.  Valuation professionals decide which measurement to use for a business valuation from various authoritative standards including court orders, case law, administrative law, or statutes of states or federal laws. A company’s documents, buy-sell agreements, articles of incorporation, or the like might also specify the method to use. The valuator may also use professional judgment in making this decision. Because of this, a valuation professional who is qualified and experienced is important when choosing one to hire. It can make a difference in whether or not evidence is accepted in court.

The most commonly used measurement of value is fair market value.  If you are trying to value a business interest for gift or estate tax, this is what you will probably use. Other valuation methods may include investment value, intrinsic value, or some other standard.  According to the IRS, fair market value is defined as, “the price at which the property would change hands between a hypothetical buyer and seller who have reasonable knowledge of the relevant facts and are under no compulsion to enter into the transaction.”

Fair market value is the price for which an exchange would likely happen if transacted on the valuation date. Fair market value is the value for the best use of that property on that date, considering all uses available realistically. This amount does not change regardless of the use chosen for the property.

Valuation methods can be complicated without the proper skills.  We, as an Albuquerque accounting firm with years of experience can help shed some light on this issue.

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation and bookkeeping in Albuquerque New Mexico.

Sara Heppler is a Staff Accountant at Hinkle + Landers, PC 

Hinkle + Landers, PC, one of the leading Albuquerque CPAs and accounting firms, stays up to date on news that has an impact on the accounting industry and our community. The Previous blog is by Sara Heppler, a staff accountant of Hinkle + Landers, PC on things for business valution methods or business consulting to consider when accounting in Albuquerque.

Business Consulting Service - Hinkle + Landers, PC

The importance of researching, who is in charge of investing your money

Here at Hinkle + Landers, PC, one of the Albuquerque accounting firms, as a part of our Business Consulting Service we stay up to date on news that has an impact on our community.  By keeping current on settlements and awards regarding fraud that affect members of our community, we are able to remain vigilant regarding potential risks to our clients. Investor risk is not only relevant to individuals, but also any size organization.  Many organizations rely on financial advisors, investment firms, or Foundations to manage their investments.  These investments usually make up a significant portion of the organizations assets.  As a result, due diligence regarding the person who is in charge of investing the organization’s money, can make all the difference.

Recently a hedge fund manager, Matthew Sample settled a federal lawsuit, where he was accused of defrauding five investors, two of whom were from New Mexico.  The lawsuit accused him of raising $1 million from the investors over a 3 year period.  Of that million about $500,000 was actually traded, and the remaining money was used for his personal use, or to pay other investors.  The New Mexico investors invested over $700,000 with Mr. Sample and when they requested to withdraw $500,000 from their funds, Mr. Sample gave multiple excuses as to why their money was not available. 

Although this news story relates to defrauded individuals, our business consulting service, pass this news and others like it on to our non-profit organization clients.  Since many of our clients are involved with financial advisors and Foundations, we cannot over emphasize the importance of researching who is in charge of investing their money once they outsource that responsibility. When one of our clients is deciding whether or not to change financial advisors or Foundations, we encourage them to reach out to us, and in turn we reach out to other Albuquerque accounting firms, and see if the potential advisor or Foundation is working with other non-profit organizations, and what their reputation is.  We strive to work with our clients in order to prevent any misuses of their money, and stay ahead of anyone trying to defraud them out of their hard earned assets.

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides fraud and forensic accounting services in Albuquerque New Mexico