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Business Valuations

Shields & Company has completed hundreds of business, securities, and intellectual property valuations for both public and private companies and securities. 

Our valuation team complements our M&A practice by combining practitioner experience with sophisticated valuation methodologies and models. 

Whether it is to fulfill fiduciary duty, mitigate risk, determine corporate value, or support financial reporting, our rigorous analysis, objective and independent assessments of value, and support help our valuation clients achieve their objectives.  Our partners have successfully defended valuations in court and have provided litigation support and expert testimony in a variety of matters involving securities valuation issues.  A number of our principals are members of the American Society of Appraisers.


Goodwill Impairment

Incentive Compensation

Purchase Price Allocations


Estate and Gift Tax

Nonqualified Deferred Compensation (409A)

Valuations of Donated Securities


Acquisitions and Divestitures

Public and Private Company Security Sales



Shareholder Disputes


Expert Testimony


Q: When and Why Do I Need a 409A Valuation?

IRC Section 409A requires that a stock option be issued with an exercise price equal to or greater than the per-share value of the common stock.  An appraisal should be performed to value the common stock.  It is best practices to have a qualified, independent third party perform the valuation.  If the IRS determines that a company has not complied with IRC 409A, the company and its employees who received stock options may be subject to heavy fines, additional tax, and interest.  The 409A valuation should be done at least every twelve months, or sooner if a material event, such as a financing, occurs.  

The AICPA has published a guide used for 409A appraisals entitled Valuation of Privately-Held-Company Equity Securities Issued as Compensation. It is recommended that 409A appraisals follow this guide.

Very-early-stage companies, prior to receiving institutional financing, may choose to value the Company’s common stock internally by a qualified individual.  We would recommend that the company seek legal advice and be certain that the individual performing the valuation is qualified prior to relying on an internally-prepared valuation.

Q: When Do I Need a Fairness Opinion?

First of all, what is a fairness opinion?  It is the analysis of a transaction and an assessment (opinion) of whether it is fair or not, from a financial perspective, usually meant for a certain constituency, such as “the minority shareholders.”  Fairness opinions are typically issued when a public company is sold (or is taken private); however, they may also be issued for transactions involving private companies i) if there is a large shareholder base, or ii) if there are several trusts involved and trustees are concerned about their fiduciary responsibilities to beneficiaries of the trusts, or iii) if there is a particularly adversarial relationship between or among certain shareholders.

A fairness opinion serves as evidence that a company’s board of directors sought out an expert’s financial advice prior to agreeing to a transaction.  If a lawsuit is filed, then it is important that the board based its decision on unbiased financial and legal advice.

Q: Should I Get a Valuation for Gifting or Charitable Contributions of Privately Held Securities?

Many clients ask if they should have privately-held securities appraised as part of a gift or a charitable contribution. Generally speaking, the answer is yes. First of all, it is important to note that the value of a security, for gift tax purposes, is the fair market value of the security on the date of the gift. It is not the donor’s cost basis.

The donor is required to attach IRS Form 8283 to the donor’s tax return (if the amount of the noncash charitable contribution is greater than $500). The appraiser signs the form and declares that he or she is independent of the transaction, performs appraisals on a regular basis, and is qualified to make appraisals of the securities being valued.

Q: Can We Value our Fund’s Portfolio Internally?

If you decide to perform the valuations of your portfolio companies internally, then it is imperative that established valuation procedures are followed and that they are followed consistently, from year to year and from investment to investment. Make sure that decisions, judgments, and any adjustments are well documented. We believe that a senior executive should be involved and sign off on the concluded values so that the project receives the attention which it deserves.

We have clients which ask us to assist them with their portfolio valuations. We typically help them identify comparable companies, suggest adjustments to multiples based on differences between the public-company comps and the subject portfolio company, and advise them on weightings of various methodologies.