The strength of our services
Venture Shop calls its financial and industry assessment the Business Listing Price Report. Such Report is an essential step in assuring the seller is getting the best price for the business and the purchaser is paying a price that is commercially reasonable and financially manageable in the future.
The Business Listing Price Report produced by Venture Shop is not a formal appraisal or a professional opinion of value. The full Report merely suggests a relative value of the business upon which Venture Shop and our client (seller or purchaser) will structure a listing or offering price for the Business.
More importantly, the Report will allow the seller and purchaser to make informed decisions about any offered adjustments to the listing price and the ultimate sales price as negotiations between seller and purchaser commence and proceed.
A few components of the report will summarize the financial history of the business, show historic revenue and expenses, profitability and overall health of the business. This is the portion of the report which would normally be made available to a prospective purchaser to give them a “snap shot” of the financial and economic opportunities the business presents. It will also be a crucial element to be included in any financing package our client (the purchaser) will present to its lender(s), as needed. A prospective purchaser will commence its due diligence thereafter.
The private portion of the Report is a financial evaluation of the business which will be useful tool for our client (seller or purchaser) in maximizing future profitability and illustrate potential tax consequences of the sale and purchase of the business.
It
will present to our client (seller or purchaser) profitability margins for
goods and services and both encouraging and discouraging trends in revenue and
expenses identified by Venture Shop. Included will be comparisons of the business
to similarly situated businesses in the same industry and notable differences
which should be of interest or concern to the seller and purchaser moving
forward.
Both Purchaser and sellers of
businesses must understand that not all sale proceeds are taxed at one federal
tax rate or allocated to specific assets on an ad-hoc basis. Sellers need to be informed about the higher
resulting tax on the potential recapture of accelerated tax depreciation. Such depreciation that reduced the seller’s
tax liability in the past can now generate a higher tax on receipt of business
sale proceeds.
Venture Shop will communicate as best as possible with the seller’s accountant on these issues. Based upon the accuracy, levels of cooperation and response time frame, an illustration of the potential tax liability on the sale of the business, closing costs and net proceeds paid to Owner at closing will also be included in the Report.
Allocation of the purchase price up to the fair market value of certain a specific classes of business assets is a requirement under federal tax laws (Form 8594). Negotiation of the allocation of the purchase price of the business might be the most important aspect of the proposed transaction.
Purchasers want to allocate more dollar value to assets eligible for accelerated depreciation and should take in account what amount of tax on future business operations can be minimized when forecasting their profits. Sellers simply want to pay historically lower capital gains rates by avoiding allocation of purchase price to fully depreciated business assets.
An illustration of how the purchase price allocation affects our client (buyer or seller) will be included in the Report. The inclusion of the purchase price allocation is dependent again on the accuracy of the presented financial book and records, levels of cooperation of accountants/other professionals and required response time for Venture Shop.