Valuation of Privately Held Companies
Philip Saunders Associates (PSA) values privately held companies for estate and gift taxation; income taxation; merger, acquisition, divestiture, and buyout; commercial litigation; stock options, warrants, and phantom stock plans; divorce; stockholder suits and dissolutions; and solvency opinions, reorganization, and bankruptcy.
- For industrial equipment manufacturer finding GAAP violations and overstated earnings in acquired company, PSA valued acquisition after identifying and quantifying recurring earnings shortfall. Dr. Saunders testified as to appropriate methodology for valuing shortfall and to the reduced value of company. Arbitrator accepted PSA's valuation methodology and awarded client $14,800,000, or 16% of the purchase price.
- For stockholder in restaurant company, PSA researched market, made on-site investigation, analyzed finances, adjusted for inter-corporate pricing, and performed asset, discounted cash flow, and market comparable valuations. Arbitrator accepted PSA's estimate of $1,000,000 value.
- For creditor with claim dependent upon value of international IT systems company, PSA analyzed the company, including its market position, business model, relations with affiliates, and relative attractiveness to potential buyers, mostly competitors. Valuation required multiple operational and financial adjustments to characterize company a potential buyer would acquire. PSA’s estimated value was three times amount claimed by owner. Case settled on confidential terms. Client commented, ”I really think you did a very good job for us, and I think you asked a reasonable price for your services as well.”