Valuation

Reliable business valuation requires high familiarity with numerous disciplines. Every business is as unique as the people behind it. Hancock Firm provides comprehensive services for the valuation of a business enterprise as a whole, as well as the components of the business: tangible and intangible, such as patents, copyrights, personal and company goodwill, and trade secrets. We also assess the value of fractional ownership interests, which typically require quantification of lack of control and lack of marketability discounts.

With the renewed focus on corporate governance and business owners’ demand for increased accountability, we provide independent, unbiased opinions that last. We sustain our opinions whether under judicial review, Internal Revenue Service’s examination, or scrutiny by your family and business relationships.

Our clients include business owners and their debt and equity investors, corporate boards, special committees, trustees, executors/executrixes, and other fiduciaries.

Estate and Gift Tax

When you desire to keep your business in the family after you’re gone, you need a tax strategy to make sure it can pass to your heirs unscathed. With a thorough understanding of IRS regulations and valuation principles, we provide valuations for estate and gift tax reporting.

We can also develop valuations to support you in probate proceedings.

Valuation in Litigation

When a dispute arises involving your business and i) third parties, or ii) your business partners, or iii) even a government agency, you may need an accurate assessment of your company’s true value to quantify your potential economic claims. In your business, estate, or marital dispute, we quantify a dependable and defendable value for your business that is relevant to the dispute on hand.

Our valuation litigation services fall under three main areas:

  • Commercial litigation
  • Marital litigation
  • Probate, estate, and trust litigation
Private Equity Portfolio Valuations

Hancock Firm brings real life experience and expertise in valuing private equity portfolio companies in a wide range of industries, including industrial, wholesale distribution, transportation, and a host of other sectors.  Our values are assessed for equity securities, as well as debt securities. Our involvement as a third-party valuator helps remove any appearance of conflict of interest in the valuation process.

Business and Marital Divorce Valuations

Like marriages, small business relationships can sometimes fall apart. In both cases, a divorce to separate the two parties and their assets–or investments in the company–is the result. In many cases, both divorces may proceed simultaneously, as the business owners are also a married couple.

During this difficult time, Hancock provides unbiased analysis for either settlement or trial purposes. From inventory and appraisement to community property valuation and personal goodwill quantification, we develop a clear picture of your financial interest in the relationship and can testify to such in the courtroom, if necessary.

Our team includes Certified Divorce Financial Analysts (CDFA) accredited by the Institute for Divorce Financial Analysts (IDFA).

Executor and Trustee Reasonable Compensation

Generally, trustees and executors are compensated in one of two ways: a flat fee or a percentage of the estate or trust assets. Ultimately, an executor’s or a trustee’s compensation should be fair and reflective of the time and effort they expended to manage the trust. Hancock Firm provides defensible reasonable compensation analyses for business executive positions as well as executors and trustees.

  • Estate and Gift Tax
  • Business Value
  • Subchapter C to Subchapter S Conversions for Federal Income Tax Reporting
  • Partner Admissions and Retirements
  • Buy-sell Agreement Consulting and Measurement
  • Assessments of Strategic Options (such as Succession Planning, Transaction Planning, Debt and Equity Alternatives)
  • Phantom Stock Plans, Restricted Stock and Stock Options
  • Stock Redemptions, Worthless Stock Election and Disguised Dividend Analysis
  • Insolvency Analysis for Debt Restructuring / Forgiveness
  • Reasonable Compensation
  • Non-profit Entities, Private Benefit and lnurement Review
  • Section 409 (a) Elections
  • Goodwill Impairment, Purchase Price Allocation and Personal Goodwill
  • Debt Instruments, Executive Compensation and Key Person Value
  • Business Purchase and Acquisitions
  • Contingencies, Undivided Interest Discounts and Intangible Assets
  • Employee Stock and Equity Awards
  • IRS Mandated Reports
  • Unique or Unusual Assets
  • Private Notes Payable/Receivable
  • Lawsuits on Appeal
  • Earn-outs on Business Sales
  • “Shadow Stock” Plans and Unsecured “Royalty” Payments
  • Piecemeal Software Code
  • Patents in Pre-Commercial Stages, Pre-Development Stage Enterprises and Research and Development Stage Entities

Business Valuation Process

Step 1

Gather Information

Once we are engaged, the initial step is to collect all relevant information about the business, including financial statements, historical performance data, market trends, industry conditions, and any other factors that could affect the company’s value.

Step 2

Management Interview/Site-Visit

Our work is not built by using one-size fits all templates. It is important for us to understand what makes
the business run, who the key people are, and what risks and opportunities lie ahead. Once we obtain and digest the financial information provided, we will request a meeting to discuss topics important to the valuation.

Step 3

Build Valuation Models

Asset Approach:
This approach determines the value of a business by considering its assets and liabilities. Assets may include tangible assets such as property, equipment, and inventory, as well as intangible assets like patents, trademarks, and goodwill. Liabilities such as debts and obligations are subtracted from the total asset value to determine the net asset value of the business.

Income Approach:
Also known as the discounted cash flow (DCF) method, this approach estimates the present value of the future cash flows generated by the business. Future cash flows are projected based on expected revenue, expenses, and growth rates, and then discounted back to their present value using a discount rate that reflects the risk associated with the business, or a Capitalization of Earnings method, that determines the value of an organization by calculating the worth of its anticipated profits based on current earnings and expected future performance.

Market Approach:
This approach involves comparing the business to similar companies that have been recently sold or are publicly traded. Comparable companies are analyzed based on various factors such as revenue, earnings, growth potential, and market share. The valuation is then derived from the market multiples (such as price-to-earnings ratio or price-to-sales ratio) of these comparable companies.

Step 4

Identify Important Intangible Assets

Assets include key person value/personal goodwill, patents, trademarks, trained and assembled workforce.

Step 5

Apply Discounts and Premiums

In some cases, adjustments may be made to the calculated value to account for factors such as lack of
marketability (if the business is not easily sold) or control (if the valuation is for a minority interest). Conversely, premiums may be applied for factors such as synergies in a merger or acquisition scenario.

Step 6

Review and Reconciliation

It’s important to review the valuation report carefully to ensure accuracy and consistency. If multiple valuation approaches were used, they may need to be reconciled to arrive at a final value for the business.

Step 7

Communication and Presentation

Finally, the valuation report is communicated to the relevant stakeholders, such as business owners,
investors, lenders, or potential buyers. Clear communication of the valuation methodology and findings is essential for informed decision-making.

Step 8

Valuation Report Finalization

Going through a rigorous quality control process to confirm the report will meet the reporting standards
of the eventual audience.

What Our Clients Say

What Our Clients Say

“Shanks & Hauser, L.L.P. and our clients have benefited from the diversity of Hancock Firm, including the up and coming young professionals like Kelly Sullivan and Shea Hancock who have taken the required education and certifications to properly address estate and gift valuations. The varying certifications held by their team members add to the quality of their work product.”

Rick ShanksShanks & Hauser, L.L.P.

“We found the Hancock Firm on an internet search for business valuation firms. We were in need of an impartial assessment of value for business planning. After three involved telephone conversations with Shea Hancock regarding scope of services and fees, we engaged Hancock Firm. Ultimately, we not only discovered our business value but also valuation issues that have helped steer American Disposal to ‘greener pastures.’”

Doug IveyAmerican Disposal Services, Ltd.

“Hancock Firm was introduced to me over 10 years ago by a prominent local attorney. Since that time, Hancock Firm has assisted my companies with numerous, complex deal valuation and purchase price allocation assignments. In every case, Hancock Firm provided exceptionally high-quality service on a timely basis and a good value proposition. Most recently, our company was part of a merger funded by a Fortune 100 company with high growth expectations. Hancock Firm contributed valuation services for the merger. We expect to avail ourselves of Hancock Firm’s services many times in the future.”

John H. UnterekerPreventice Solutions, a strategic combination of eCardio and Preventice

“I just wanted to let you know that we were able to settle the matter yesterday and your report was a key turning point in the settlement. It completely unwound the report of the other valuation firm. The mediator was very complimentary of the report you issued. I want you to know that I appreciate your assistance in turning this around so quickly and for coming up with such a good product. Fortunately, the mediator was very familiar with the issue and the surrounding law so he honed in directly on your financial points that were properly linked to the law.”

Jeef HoustonGBH CPAs, PC

Business Valuation Case Studies

Business Valuation Case Studies

See how some of our past valuation clients benefited by working with us.

Best Redi-Mix thumbnail

Best Redi-Mix

Best Redi-Mix is a successful provider of concrete to customers in the greater Houston area for 25 years. Under the leadership of its founder, Roger...

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MEI Technologies thumbnail

MEI Technologies

MEI Technologies is an engineering and technology company offering innovative applied engineering, cyber service and security and technical support...

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Recent Valuation Projects

Recent Valuation Projects

  • Provided valuation and preliminary transaction guidance to a specialty metal recycler in Austin, Texas
  • Provided valuation and consulting services to a $40 mm revenue heavy equipment dealer in Houston, Texas
  • Provided valuation for a partner buy out of a $30 mm revenue plumbing company in Houston, Texas
  • Provided valuation services to a family limited partnership that owns several hundred oil & gas interests for estate planning.
  • Provided valuation services to a commercial construction company buying out a partner
  • Prepared a valuation of a family limited partnership holding various assets such as real estate, fractional interest in closely held operating businesses, oil & gas interests, and private equity investments totaling over $200 million
Contact The Valuation Team

Contact Us

It all starts with a conversation. Contact us by filling out this form or calling our main line to set up a consultation.