2020 Valuation of Closely Held Companies

Virtually every transaction of a closely held company requires a valuation. The company may be selling itself or some of its assets; obtaining a loan or placing equity with new investor; or the valuation may be needed for trust and estate planning. But valuing a closely held company is much art as science because there is no regular and liquid market matching buyers and sellers. This can make valuation highly contentious as parties argue over add-backs, discounts and premiums, and how to “price” cash flow or earnings. And all the familiar calculations have been altered by recent tax law changes. This program will provide you a real-world guide to valuation methodologies, areas of common dispute, and drafting tips.

• Valuation methodologies depending on the type of business or asset – asset-based, cash flow, market comps, and intrinsic value
• Role of objective factors v. professional judgment
• Impact of recent tax law changes on valuation
• Valuation premiums and discounts – “fair market value” and “fair value”
• Valuation drafting issues for lawyers
• Costly valuation mistakes and how to reduce risk of dispute

Note: This material qualifies for self-study credit only. Pursuant to Regulation 15.04.5, a lawyer may receive up to six hours of self-study credit in a reporting year. Self-study programs do not qualify for ethics, elimination of bias or Kansas credit.