(A common sense approach that will show you how the value should be determined and why the in-vogue pseudo-scientific approaches don't work.)
All rights available from author.

361 pages

By Orville B. Lefko
CPA, CFA, BA in Economics and
MBA in Marketing from the University of Michigan with
Phi Beta Kappa and Beta Gamma Sigma honors.

Mission statement to publishers:

This book offers proof that business appraisers who use conventional, widely accepted valuation procedures produce incorrect, even ridiculous value opinions. The preferred approach, a common sense approach for use in the real world, is explained in the book's Chapter 5. Chapter 9 expands on Chapter 5 to show how it is possible (contrary to conventional wisdom) to construct a valuation procedure which will produce values over an extended period of time that are realistic and fair to all parties concerned.  That type of procedure, a formula approach, is indispensable for buy-sell agreements, prenuptial agreements, ESOPS and for owners who want to give or sell an interest in a business to key employees.            

I wrote the book with two main groups of people in mind.  Common to both groups is the need to know the fair market value of a closely held business.

Examples of those in the first group: 

1)      The owner of a closely held business who wants to sell all or part of it.

2)      Someone interested in buying a business or an interest in one.

3)      An owner of a closely held business involved in a divorce action.

4)      A business owner who is entering into a prenuptial agreement.

5)      Two or more buyers of a business who will need a buy-sell agreement.

6)      A business owner who wants to establish an Employee Stock Ownership Plan.

7)      An owner who wants to gift stock in the company to his children.

8)      A widow whose late husband's business is now part of an estate of interest to the IRS.

 
Examples of those in the second group:

 1)      An attorney, CPA, certified financial planner (CFP), or
       other tax or financial consultant working on an estate plan.

2)      Employees of a business that has an Employee Stock Ownership Plan (ESOP).

3)      The owner's wife in a divorce action or his fiancée for purposes of a prenuptial agreement.

4)      Shareholders who are trying to settle a dispute such as in a minority interest oppression suit or in a merger where there are dissenting shareholders.

5)      Financial institutions that may be called upon to finance a leveraged buyout or other business acquisitions.

6)      Bank trust officers who must decide whether to accept or reject an offer for a closely held business held by a trust for which the bank is trustee.

7)      The IRS in estate, gift or other tax matters.

8)      Various courts where judges may hear cases involving business valuations.

 
Unfortunately for both groups, common sense is a vital ingredient too often lacking in closely held business appraisals.  Conventional wisdom as to how to do a business valuation is faulty or just plain wrong in many ways.