SMK’s business clients come in all sizes – start-ups to multi-billion dollar corporations – and all industries. While every business is different and each client is unique, there are similar valuation characteristics shared by all. SMK has a broad understanding of industry-accepted methodologies and approaches, and our work is continually updated to stay current with the latest court cases and government regulations. In turn, this has given us the experience and expertise to accurately opine on the value of specific equity interests throughout a wide range of industries, including the following.

• Wealth transfer and business transactions
• Employee ownership plans
• Shareholder litigation and other contested matters

Wealth Transfer and Business Transactions

Since 1946, when Ray Sheldrick first provided valuations to assist the prominent DuPont family with their land and company acquisitions, our firm has generated thousands of valuations for all types of transactions.

The largest percentage of our work deals with wealth transfer – estate and gift taxes – and SMK valuations are a crucial component of about 300 estate and gift tax return filings (Forms 706 and 709) annually. We also provide valuations for a wide variety of business transactions including buy-sell agreements, mergers and acquisitions, pre-IPO options, incentive stock option programs, corporate tax basis conversions, intellectual property sales and transactional fairness and solvency opinions for corporate boards.

Our knowledge of IRS and Department of Labor requirements regarding valuations, and use of industry accepted methodologies and approaches, in addition to our many years of experience, give a high degree of certainty and confidence to our clients. There are substantial differences and expertise required in valuing an old-line established business versus a start-up company; an unsecured promissory note versus a mortgage note with hard collateral; and many other instances where our years of experience will be invaluable.

Employee Ownership Plans and Valuing an Exit Strategy

SMK is responsible for the annual valuation of more than 60 employee ownership plans. ESOPs were created to provide a tax-efficient way for private business owners to sell all or part of their companies to their employees.

As a qualified employee benefit plan, the ESOP borrows money and buys the current owner’s stock, which is held in the ESOP for the participating employees. The ESOP repays the loan with funds from company distributions to the Plan. The ESOP needs, at a minimum, an annual stock valuation, which is used to allocate shares to each participating employee’s account.

In addition to annual valuation engagements, our services include feasibility studies; family/owner counseling; and advice on ESOP “pros and cons,” management continuity issues, repurchase liability and the effect of ESOP borrowing leverage on value. Don’t hesitate to contact us with your questions.

Expert Litigation Support

Staying abreast of the latest legal opinions and business strategies, Sheldrick, McGehee & Kohler has amassed a vast amount of practical expertise and in-depth knowledge that can be applied to any litigation issue.

Our staff, which includes a full-time designated litigation expert, has experience in federal court, tax court, bankruptcy court and various state jurisdictions. We have also provided valuations for mediation and arbitration hearings, including U.S. Department of Justice deliberations.

In addition to expert witness depositions and trial testimony, SMK also offers consulting and support for contested matters. For example, we’ll develop strategies to address opposing valuation arguments, and create exhibits or displays for the trial process.

Please contact us to discuss your needs with litigation or contested matters.

Businesses and Industries Served

A few examples of the variety of work SMK has handled include a nationwide soda bottler/distributor, a chain of regional motorcycle franchises, a large off-shore fishing concern, a fruit juice manufacturer sold to an international food company, and the estates of two separate attorneys involved in the 1990s Tobacco Settlement Agreement.

Please contact us if you would like to discuss a valuation project or inquire as to what our approach would be to value a specific equity interest. While the assignment may be very unique, SMK will know what to do to determine the correct value.

Materials Typically Required for Valuations

We generally work with the following information and materials. Additional information may be requested during the analysis.

• Six years of financial statements and tax returns and interim financial statements as of or near the valuation date.
• Depreciation schedule for each year if not included in the tax returns.
• Financial projections and/or budgets, if available.
• Real estate appraisal, tax assessment statement or estimate of market value for any company-owned real estate if applicable to the assignment.
• Business Profile questionnaire to be completed by the client for company history and operations (Profile provided by SMK).
• Copies of any shareholder/partnership/operating or other business agreements and amendments, and any other information considered relevant to or that might impact the valuation.
• Copies of By-Laws and Articles of Incorporation for S corps with voting and non-voting stock.
• Detailed information applicable to any outstanding corporate litigation, environmental, or other issues that might impact the value of the business.