American ValueMetrics (AVM) is a national boutique business valuation firm with 40+ years’ experience providing the highest levels of service and quality. They consistently provide complex, sophisticated and highly defensible valuations. They hold theirselves to extremely high standards, and their conclusions of value have thus far withstood challenges including, IRS, Daubert or otherwise.

They provide complete business, qualitative and quantitative analyses, thorough modeling and an understanding of complex business enterprises. They include complete financial analyses and legal foundation of the interests being valued that support the conclusions of value. The result is that the report, as a whole, is easily comprehended and makes sense to the reader, and if required, to the ctheirt. The reports also comply with the Federal Rules of Evidence, and the Federal Code of Civil Procedure. This is important when the report is used as testimony in litigation cases.

Reports and analyses prepared for potential litigation form the basis for their expert witness services where they are qualified experts in business valuation and intellectual property valuation and damages.

Their valuation reports meet the professional standards of USPAP, NACVA and NEBB and the regulatory requirements of IRS, ERISA and DOL. Their professionals hold the following designations: Accredited Valuation Analyst (AVA), Certified Forensic Financial Analyst (CFFA), Certified Senior Business Analyst (CSBA), and Certified Machinery and Equipment Appraiser (CMEA).

Services
American ValueMetrics provides comprehensive valuation services. As accredited valuation analysts and certified forensic financial analysts, they are able to specialize in sophisticated and complicated valuations of businesses, fairness opinions, intellectual properties, damages & lost profits, stock programs, machinery & equipment and other securities (including oil & gas rights, mineral rights, derivatives, notes, etc.)

Business Valuations & Fairness Opinions
American ValueMetrics provides valuations over virtually every area of business and investment. All valuations meet USPAP and NACVA standards. They all meet the requirements of the IRS, ERISA and DOL as regards qualifications of the appraiser and the valuation report. The following are common types of valuations.

Business Transactions, Mergers and Acquisitions

• Mergers and Acquisition business valuations
• Coordinated exit strategies (sale or purchase of business)
• ESOPs
• Intellectual Property and Portfolios (technology, patents, trademarks, trade names, copyrights, book, movie or music royalties, etc.)
• Non-Compete Agreements
• Partner disputes, shareholder buyouts, goodwill values, etc.
• Corporate structure conversions – C-Corps to an S-Corp or vice versa
• Business damages, assessments for litigation
• Quality of Earnings (as part of due diligence)
• Fairness Opinions
• Closely-held companies, LLCs, FLPs, LPs and other types of closely-held entities
• Non-publicly traded securities
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Bankruptcy and Restructuring

• Business valuations for liquidation, solvency or going-concern purposes
• Valuation of assets for debtors and creditors as theyll as lenders (both secured and unsecured)
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Tax Planning and Compliance, Estate and Gift Tax Planning
American ValueMetrics provides valuation reports for tax planning and compliance as theyll as estate tax and gift tax purposes. Some of the common areas for valuations include:

• Transfers of business ownership interests, real estate interests, charitable donation interests and other types of security interests in FLPs, LLCs, LPs, Corporations, Trusts and other entities
• Determination of appropriate premiums or discounts for lack of control and/or marketability
• Non-cash charitable contributions
• IRS Form 8283 preparation
• Corporate structure conversions – C-Corp to an S-Corp or vice versa, ESOPs
• Corporate ownership changes – (partner or shareholder buyout, disputes, etc.)
• Allocation of purchase price for tax purposes
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Litigation Support

American ValueMetrics provides comprehensive support for all types of litigation and dispute resolution. These typically fall into one of three groups – tax related, business/intellectual property damages, and marital dissolutions. Tax related issues are virtually all business valuation issues. Business/Intellectual property damages are usually Lost Profits and/or Reasonable Royalty determinations but may deal with Diminution of Value as theyll.

Tax Issues. For tax related problems, their efforts have been 100% litigation avoidance. And they have been successful. None of the thousands of tax related valuations they have prepared has reached the level of litigation.

Valuations have been performed for ERISA compliance, mergers and acquisitions, Gift and Estate Taxes, IRC 409A compliance (employee stock options) and Built in Gains (BIG) determinations for C to S corporation conversions.

Marital Dissolutions. They can provide valuations of business interests for settlement of marital estates in either the collaborative mode (where they are engaged by both sides to prepare an independent valuation, which is then used for settlement negotiations) or in the litigated mode, where the value is disputed and goes to ctheirt. The rules vary mightily from state to state.

Non-Compete Agreements. Valuation of this type of intangible asset is often required in damages claims for breach. They prepare these valuations.

Business/IP Damages Cases. Historically, their efforts track very close to the national statistics, with about 65% of their work being used as a basis for settlement, and 25% being used to reach mutual agreements to dismiss. National statistics show that of the remaining 10% or so that actually go to trial, about 70% of them resulted in a summary judgment and only 30% of them actually go on to full trial.

As to the type of damages sought (aside from business valuation issues) the national statistics show about 67% for Reasonable Royalty damages, about 28% for Lost Profits damages, and about 5% for Price Erosion damages. Their experience is about the same.

Need for Timely Action. Under the Federal Rules of Civil Procedure, the Plaintiff is required to submit a computation of damages and supporting evidence a short time after the Defendant anstheyrs the complaint. In practical terms it means that the damages assessment valuation must be done prior to the filing of the complaint, since the Plaintiff must “live” with this assessment, and because there will likely be immediate settlement negotiations. Therefore it is important to engage the valuation firm early on to have adequate time to complete this. It is a common cause of failures of such claims.

Intellectual Property
Intellectual Property is a type of intangible asset for which legal protection was created in the U. S. Constitution, Section 8, and is administered by the U.S. Patent and Trademark Office. It is generally comprised of ftheir principal types:

• Patents
• Trademarks
• Copyrights
• Trade Secrets
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It is probably the most valuable of all assets of a company, with the possible exception of real estate. Valuations of IP are normally required for a variety of reasons including:

• Transactions
• Bankruptcy
• Licensing
• Strategic Alliances
• Estate and Gift Taxes
• Marital Dissolution
• Infringement Damages
• Financing
• Accounting Requirements
• IPO’s
• Ad Valorem Taxes
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Damages. All types of IP can recover damages for Lost Profits, and all are entitled to at least a Reasonable Royalty. All, except for patents, can also claim Unjust Enrichment damages (profits of the defendant). They are qualified experts in preparing assessments of such damages.

Importance of expert valuation. The overwhelming proportion of IP cases (in the order of 90%) are resolved by voluntary dismissal (about 25%), and settlements (about 65%). Of the 10% or so that actually go to trial, about 70% of them are decided on a summary judgment, and only 30% of them by an actual trial.

This points up the importance of the valuation and damages assessment early on. When both sides have the opportunity to review the valuation of damages, and the respective claims, it is usually conducive to a settlement rather than expense of litigation.

Experts. Expert testimony and reports are prepared by Certified Forensic Valuation Analyst. The term “forensic” refers to analyses prepared for ctheirt, by a qualified expert, which complies with the rules of evidence, and from which if it goes to trial, the expert may testify.

ESOPs
American ValueMetrics provides the following services for Employee Stock Ownership Plan (ESOP) companies:

• ESOP Valuations and Advisory – initial and annual valuation services for ESOP companies. The firm works with the Trustees and ESOP Committee to provide ongoing advisory as it relates to the valuation. The firm offers independent, third-party valuation services combining comprehensive management and trustee interviews with extensive financial analysis and legal foundation to deliver defensible valuation reports.
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• ESOP Fairness Opinions – provide ESOP fiduciaries with independent fairness opinions for proposed ESOP transactions to ensure adequate consideration for the assets to be transferred.
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• ESOP Redemption Studies. Comprehensive analyses of contingent liability for ESOP redemptions allotheyd by the plan based upon vesting, eligibility, death, termination, retirement, diversification and other factors, and actual liabilities for retirement payouts.
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American ValueMetrics is a member of The ESOP Association and The National Center for Employee Ownership (NCEO) and stays abreast of issues, such as repurchase obligations, financing options, FMV, that affect ESOP companies.

The valuation reports comply with the standards of USPAP, NACVA and NEBB and the regulatory requirements of IRS, ERISA and DOL. Their professionals hold the following designations: Accredited Valuation Analyst (AVA), Certified Forensic Financial Analyst (CFFA), Certified Senior Business Analyst (CSBA), and Certified Machinery and Equipment Appraiser (CMEA).

Stock Incentive Programs and IRC 409A Compliance
IRC 409A sets forth standards for Non-Qualified deferred compensation of employees. Once a simple concept – reward employees for participating in the growth of value via stock options – has now become a very complicated area of tax regulation and accounting. The various tools that lie within this genre include:

• Stock Options
  • Incentive Stock Options (ISOs)
  • Non-qualified Stock Options (NSOs)
• Restricted Stock
• Restricted Stock Units
• Stock Appreciation Rights (SARs)
• Phantom Stock
• Employee Stock Purchase Plans
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IRC 409A basically requires that IF options are issued with a strike price LESS than the Fair Market Value (FMV) of the stock at the time issued, then the employees will be subject to income tax on deferred compensation, and the company (issuer) will be subject to very complicated accounting rules and tax consequences.

Companies need to make sure that options are issued with a strike price that is equal to or more than the FMV of the stock, at the time it is issued, or it will create problems they may not want to address.

FMV implies discounts for lack of control and marketability for minority interests unless the stock is publicly traded. It also requires that to assess FMV, the valuation must address not only the value of the hard assets but also the intangible asset value, meaning book value alone cannot be used as a determinant of FMV.

IRC 409A requires that a business valuation be prepared upon or within 12 months of the issuance of the options.

A business valuation of a company’s stock must consider the following:

• Restrictions placed on the options,
• Ongoing calculation of what options are outstanding and which options are “in the money” on the grant date,
• Calculation of the FMV of the outstanding fully diluted shares,
• Discrete intangible asset value and/or non-discrete “goodwill” value,
• Assessing the preferred stock before determining the equity value of the common stock.
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Tax and Financial Reporting
American ValueMetrics provides valuation reports for most financial reporting needs. They all meet necessary requirements as to appraiser qualifications, and the qualifications for the report. Some of the common areas are listed below.

• FASB 141 Compliance – purchase price allocation of tangible and intangible assets
• FASB 142 Compliance – determination of goodwill and goodwill impairment
• IRS Section 409A Compliance – allocation of stock options – see Stock Incentive Programs and IRC 409A Compliance
• ERISA compliance (ESOPs, 401k & other pension trusts) – see ESOPs
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Machinery & Equipment

The enterprise value of businesses is the greater of the enterprise value (fixed plus intangible assets) or the tangible assets (if the earnings of the company do not produce goodwill value.) In business valuations for marginally profitable companies, often the valuation requires a machinery and equipment appraisal.

Also, machinery and equipment appraisals may be needed for financial reporting at Fair Value under the new accounting standards.

The professionals at American ValueMetrics are Certified Machinery and Equipment Appraisers, and can produce reports compliant with USPAP standards 7 and 8.

They can provide either an inspected or desktop appraisal of the machinery and equipment.