Valuation of a closely held business is frequently a stumbling block in a succession or estate planning engagement. Formal valuations may eventually be necessary, but at the beginning they are often viewed as time consuming and expensive. Several major insurers offer informal assistance in valuing closely held businesses. This article will assist financial services professionals to become conversant with common valuation formulas and related topics, so they can be more effective in assisting in succession and estate planning engagements that require business valuations.
Author:David K. Smucker, CPA, CLU, ChFC, MSM, is a retired technical director of the Advanced Consulting Group of a major life insurer. He holds a BA in history from Ohio State University and an MSM from The American College. He earned his CPA certificate in 1973. Mr. Smucker is a frequent contributor to financial services and tax publications. In the Advanced Consulting Group, he advised producers, CPAs, and attorneys on tax and other aspects of executive compensation, business succession planning, and estate planning. He has developed and presented life insurance continuing education programs to CPAs and financial service producers on all of those topics. In retirement, he maintains a CPA practice limited to consulting on and administering split-dollar arrangements.
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This article appeared in the May 2019 Journal of Financial Service Professionals.
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