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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Corporate Law

Date & Time
  • event Date

    Thursday, September 28, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00
CLE
ALL

This CLE course will examine practical and legal issues in determining a closely held entity's value when facing a sale of a portion or the entire ownership interest. The panel will discuss the various forms of valuation methodology and how to incorporate these terms into governance documents and buy-sell agreements, as well as address future adjustments and the implications of valuing real estate and goodwill assets.

Faculty

Matthew E. Rappaport
Vice Managing Partner
Falcon Rappaport & Berkman LLP

Mr. Rappaport chairs FRB’s Taxation and Private Client Groups. He concentrates his practice in Taxation as it relates to Real Estate, Closely Held Businesses, Private Equity Funds, Family Offices and Trusts & Estates. He advises clients regarding tax planning, structuring, and compliance for commercial real estate projects, all stages of the business life cycle, generational wealth transfer, family business succession, and executive compensation. Mr. Rappaport also collaborates with other attorneys, accountants, financial advisors, bankers, and insurance professionals when they encounter matters requiring a threshold level of tax law expertise. He is known for his work on complex deals involving advanced tax considerations, such as Section 1031 Exchanges, the Qualified Opportunity Zone Program, Freeze Partnerships, Private Equity Mergers & Acquisitions, and Qualified Small Business Stock. Mr. Rappaport has served as a trusted advisor for prominent real estate funds, executives of multinational corporations, venture capitalists, successful startup businesses, ultra-high net worth families, and clients seeking creative solutions to seemingly intractable problems requiring tax-focused analysis. 

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Harold L. Deiters
Senior Managing Director
Empire Valuation Consultants

Mr. Deiters is a trained professional in preparing business valuations and performing forensic accounting. His experience covers valuations for matrimonial and estate tax purposes, gift planning, shareholder disputes, economic damages and buy/sell agreements. He has extensive experience in tax return preparation, accounting and auditing both public and privately held companies, including manufacturing, wholesale and retail distribution, professional service organizations and not-for-profit organizations. In addition, Mr. Deiters has over eight years of accounting experience in the private sector. He is a frequent lecturer and former adjunct professor at St. Joseph’s College teaching principles of auditing.

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Description

When representing a closely held entity, whether a corporation, LLC, or partnership with a small number of owners and that is not publicly traded, it can be difficult to discern the business' value. Whether the owners are looking to sell a portion of the company or the entire enterprise, creating a framework for valuation early in the corporate legal development can alleviate future disputes.

There are numerous valuation methodologies and advantages and disadvantages to using each method. Some methodologies favor particular industries and whether conflicts of interest exist or where a fiduciary duty is present. Drafting these provisions can also forestall future disputes among owners.

Outside of governance documents, corporate counsel might consider drafting buy-sell agreements that include methodology and adjustment provisions. However, counsel must consider when and how to incorporate an entity's real estate, whether it should be part of a single-asset sub-entity, and how and when to address goodwill as part of the business value.

Listen as our authoritative panel discusses best practices for drafting valuation provisions in corporate governance documents and buy-sell agreements. The panel will address various valuation methodologies and how corporate documents can anticipate adjustments and fixed value of all assets, including real estate and goodwill.

Outline

  1. Valuation methodology
    1. Net asset value
    2. The earnings approach
    3. Dividend-paying capacity
    4. The market approach
  2. Valuation adjustments
    1. Lack of marketability
    2. Minority interests
    3. Loss of a key person
    4. Built-in capital gain
  3. Buy-sell agreements and fixing value
  4. Attribution of value
    1. Real estate assets
    2. Goodwill as asset

Benefits

The panel will review these and other key issues:

  • How should counsel assist in determining the value methodology in corporate governance documents and buy-sell agreements?
  • When should value adjustments be made to corporate documents to reflect business growth?
  • When should a buy-sell agreement address fixed value?
  • How can counsel work with appraisers, accountants, and other professionals to determine or calculate business assets, including real estate and goodwill?
  • When should real estate be spun away from other assets in determining value?