Firm News and Events

Wednesday, March 28, 2012

Forensic CPA to Speak at East Brunswick Public Library

Eight Ways of Valuing A Family Owned Business is the topic of a presentation at the East Brunswick Public Library Business Resource Center on Wednesday April 25 at 7 pm.

Edward Mendlowitz, CPA, certified in financial forensics and business valuation by the American Institute of CPAs, will discuss the reasons for valuations, differences between the types of valuations and when each is appropriate. 

Valuations for family owned and closely held businesses are confusing because of the varied reasons and uses and the potential for litigation in some cases.  The eight ways that Mr. Mendlowitz will discuss are fair market value for tax based transactions including gifts, estates and employee compensation; valuing a business for a divorce; selling the business; buying a business as an Investment; buying the business to work in it; buying for a strategic reason; valuations in an owners’ agreement; and valuation for a personal financial plan.  Each has a different set of rules and methods and the valuations can vary greatly.  Mr. Mendlowitz will illustrate and explain eight different values for the same sample business.

It is important to understand the differences and why each method is important for its purpose.  In some valuations, even the date of the valuation is an issue.  For example, the proper valuation date in a divorce could be the date the parties separated, date the complaint was filed or a later date depending on the individual circumstances.  This is further complicated if the gap between the earliest and latest dates is a couple of years.

The identity of the ultimate recipient of the valuation is also an issue.  If the person selling a business requests the valuation, will it be provided to the potential buyer, or used as a strategy guide in setting the starting and bottom prices?  Likewise if the buyer requests the valuation will he be provided with all the information needed to form an opinion including negative data.  That is where the investigative skills and experience of the appraiser comes in.

In formulating an owners’ buy-out agreement it is necessary to determine a value where either party could be the buyer or seller.  There, a balance of the interests needs to be considered and the valuation might not be the value used if there were a sale or divorce, but it is the “right” value between the parties for the purposes of the agreement.

The hour and half program will be a fast pace adventure in how owners and other interested parties need to look at the value of a family owned or closely held business.  An informative handout will be distributed.

Edward Mendlowitz, CPA is a partner in WithumSmith+Brown, one of the top 40 CPA firms in the nation.  He is the author of 19 professional books and regularly gives presentations to CPA groups on business valuation and managing closely held businesses.

The East Brunswick Public Library Business Resource Center (BRC) is a service open to the public and regularly provides business educational programs.  There is a charge for this program of $15 for BRC members and $25 for non members of the BRC. Additional information is available at www.brc1.org or at the Library BRC. This program will be from 7:00 to 8:30 and prior registration is suggested.  The library is located at 2 Jean Walling Civic Center, East Brunswick. Information is also available at www.edwardmendlowitz.com