Valuation for Tax Planning & Reporting

Valuation for tax purposes is distinct from other types of valuations as it requires adherence to specific tax regulations, guidelines, and methodologies set forth by tax authorities. Factors such as historical financial data, future projections, industry trends, and comparable transactions are considered critical elements for supporting a value conclusion. Specific considerations may also arise, such as the treatment of intercompany transactions and the application of marketability or control discounts.

Unyvers provides comprehensive and well-executed business and asset valuations for tax purposes to ensure compliance with tax laws, support accurate tax reporting, and minimize the risk of disputes with tax authorities.

Featured Solutions

Gift & Estate Tax Planning & Reporting

Gift tax is imposed for each calendar year on the transfer of property by gift during that taxable year by an individual. The fair market value of property transferred as a gift is the price at which it would change hands between a willing buyer and a willing seller, neither under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.

Unyvers has extensive experience performing gift & estate tax valuations across industries.

Tax Restructuring & Transfer Pricing

Global companies often engage in broad tax restructuring plans aimed at simplifying their organization structure from a tax perspective. Valuation needs arise to support the value of legal entities in different territories, to support the transfer of ownership or assets within the organization structure, or to support transfer pricing plans in place.

Unyvers professionals have collectively performed thousands of tax restructuring legal entity and asset valuations. We have particular experience supporting value allocated by function, including distribution, manufacturing, R&D, supply chain, and residual IP earners.

Share-Based Payments & Equity Compensation

Companies often reward employees, partners, directors or contractors by granting them restricted stock, restricted stock units or stock options. Providing equity ownership to employees closely aligns the employee’s interests with the company’s interest and does not affect the employer’s cash flow, however it does typically dilute ownership of current owners. Under tax rules for compensation, an employee is almost always taxed on the fair market value (FMV) of the shares on the date the shares are transferred to the employee.

Unyvers helps companies determine the FMV of the granted shares or equity interests by providing comprehensive valuation reports that are objective, supportable, and grounded on valuation principles.

Valuation Modeling Solutions for Multinational Companies

A dynamic model comprised of granular financial forecasts (sales, costs, operating expenses, shared (corporate) expenses, depreciation, amortization, working capital requirements, capital expenditures, taxes, routine returns) and risk profile (discount rates) by product, by market, and by function.

Market: includes legal entities and business segments within a geographic market

Function: includes distributors, manufacturers, research & development, supply centers, residual profit earners, and holding entities

The financial model provides a complete and comprehensive view of the company enabling business leaders to:

Be transaction ready...

as a buyer or seller, for any specific part of the company (segment, product group, reporting or cash generating unit, legal entity, region), for any purpose (merger, acquisition, reorganization, divestiture, refinancing, and JV)

Make efficient tax decisions...

supporting all legal organization planning and restructuring, including transfer pricing decisions, licensing, royalty rate agreements, and IP migration

Forecast with confidence...

profitability and liquidity movements throughout the organization for financial planning purposes, business cases, and strategic options following a robust process

Achieve tax & financial reporting compliance...

by applying financial projections and valuation-related inputs consistently throughout the organization and over time

Simplify your financial reporting with independent valuation inputs and analysis.

The Unyvers solutions are all you need to support your valuation assumptions to your auditors - at a fraction of the cost!

Levels of Value & Valuation Discounts and Premiums

The choice of discounts and premia are often the most important assumptions in a valuation, due to the significant impact they can have on the overall value conclusion.

Lack of Control Discount

A discount for lack of control (DLOC), as defined in the International Glossary of Business Valuation Terms, is an amount or percentage deducted from the pro rata share of 100% of the value of an equity interest in a business to reflect the absence of some or all of the powers of control.

The lack of control may be disadvantageous to an investor because of the inability to select directors, officers, and management that control an entity's operations. Without control, an investor is unable to distribute cash or other property, to buy and sell assets, to obtain financing, and to bring about other actions, all of which could affect the value of the investment, the timing of distributions, and the ultimate return to the investor.

Factors contributing to lack of control discounts:

Limited voting rights
Limited access to company information
Limited liquidity
Restricted ability to influence management decisions

The Unyvers DLOC Report is a comprehensive, tailored report that is used to support the quantification of lack of control discounts in the valuation of minority interests.

Discount for Lack of Marketability

A lack of marketability discount (DLOM) is a valuation discount applied to an asset or interest due to its limited liquidity or difficulty in being sold in the open market. This discount reflects the decreased value of an asset that is not easily tradable or convertible into cash compared to a similar asset that is more liquid.

Key Characteristics of Lack of Marketability Discount:

Liquidity Constraints: Assets or interests with lack of marketability are harder to sell quickly or at a fair market price. This could be due to factors like limited market depth, restricted buyer pool, or regulatory constraints.
Investment Horizon: Longer holding periods or the need to find a buyer in a niche market can impact the perceived value of an asset.
Transaction Costs: Higher transaction costs, such as legal fees, brokerage fees, or additional costs associated with finding a buyer, contribute to the marketability discount.

Factors Influencing Lack of Marketability Discount:

Nature of the Asset: Unique or specialized assets, such as private company shares, restricted securities, or illiquid real estate, typically face higher marketability discounts compared to publicly traded stocks or highly liquid assets.
Company Characteristics: For privately held companies, factors like size, financial performance, industry, and the presence of restrictions on the transfer of shares affect the discount.
Economic and Market Conditions: Broader market conditions and economic factors, such as overall market liquidity or economic downturns, can impact the degree of the discount.
Regulatory Restrictions: Legal restrictions on the transfer of shares or interests can increase the lack of marketability discount.

The Unyvers DLOM Report is a comprehensive, tailored report that is used to support the quantification of lack of marketability discounts in the valuation of privately-held interests.

The Unyvers Difference

Unyvers' success is rooted in its set up – it is led by business acumen and designed for innovation. We foster a diversity of service solutions and embrace innovative ideas. Combining that with the seamless integration of our capabilities across our practice areas, we are uniquely positioned to deliver unmatched expertise to our clients.