Our Experience in Trust & Estate Business Valuations

For over 80 years, MPI has been providing rigorously prepared and thoroughly documented business appraisals and valuations for its clients. With our roots in estate and gift tax valuation, MPI counts many of the country’s wealthiest families and largest privately owned businesses as clients. Our valuation and advisory work is regularly relied upon by these clients and their teams of expert advisors when the planning is complex and the stakes are at their highest.

The common denominator of MPI’s tax-based work centers on the determination and defense of fair market value. MPI relies on best practices, coupled with a depth of thinking and proprietary research, including our industry-leading Restricted Stock Study used to determine discounts for lack of marketability. MPI’s comprehensive valuation reports have set a standard for thoroughness throughout our profession.

MPI has eight decades of experience presenting and defending our work product to IRS agents and engineers at the initial audit and appellate levels. When needed, our senior professionals have appeared as expert witnesses in the U.S. Tax Court, U.S. District Court, U.S. Claims Court, state courts, domestic relations courts, before governmental agencies, and in arbitration tribunals.

Our analytical and client service teams are led by seasoned and credentialed professionals.  Our project experience and expertise are vast, extending throughout the U.S. and abroad and spanning countless industry sectors and niches.  Our team regularly handles operating businesses, investment partnerships, complex real estate organizations, preferred freeze partnerships, carried interest, asset management firms, private investment fund interests, professional sports franchises, restricted stock, notes, options, derivatives and royalties, among others.  Our work is regularly used to support estate tax filings, gift tax filings, asset sales and swaps, the issuance of profits interests, stock redemptions, recapitalizations, charitable donations, income tax deductions, and beneficiary litigation.

Taxpayers and their advisors seek out MPI for their most sensitive and complex valuation engagements and when they want to ensure that their project is conducted in a timely and proper manner.   MPI will often assist these advisors on various Succession Planning issues, due to MPI’s vast experience surrounding family-owned businesses and other issues surrounding high-net-worth individuals.

Working With MPI

At MPI we are driven by providing exceptional client service, being easy to work with and delivering defendable results. Each engagement is managed and overseen by a Partner and is conducted as if it will face the highest level of scrutiny.

Pre-Engagement Due Diligence

Senior MPI personnel work directly with the client and/or their team of advisors to gather basic facts regarding the subject interest/entity and to understand the purpose of the proposed valuation project.  During this period, MPI will take the client through a scoping process and may review certain financial and organizational documents so that MPI can appropriately evaluate the complexity of the project and determine an estimate of fees.  Following our pre-engagement due diligence, MPI then submits a proposal for the valuation work which will include a background of the proposed project, an information request and a project fee (expressed as a fixed fee, narrow fee range or hourly fee with a retainer).  A thorough pre-engagement diligence period is critical, especially on larger or more complex projects, to align expectations and ensure a seamless engagement from start to finish.

Engagement Team

Once MPI is engaged to perform the valuation and following receipt of all initial information requests, MPI puts together an engagement team. Projects are typically staffed with a partner, project relationship manager, senior analyst and an associate. With a deep bench of experienced analysts, we always maintain the flexibility to bring in additional senior analyst level support as needed.

Engagement Process

With the team in place and initial information in-hand, MPI begins the engagement by reviewing all financial and corporate documents. From there, initial financial modeling and industry research commences.  If the subject entity is an operating company, MPI will schedule a site visit at the main operating facility to conduct a due diligence interview with management of the business.  The on-site visit and interviews with management are a critical part of the process. During this time the appraiser must learn as much about the business as possible and be able to document that it has a thorough understanding of the company and the industry in which it operates.

Following due diligence with the client, MPI next considers the appropriate approach to determine the value of the subject interest/entity.   There are three fundamental approaches to valuing any asset; namely, the income, asset, and market approaches.

  • The income approach involves projecting the future benefits of owning an asset (usually some measure of economic income such as cash flow, earnings or dividends) and translating those future benefits into value based upon the time value of money and the investment risks associated with ownership.
  • The asset approach involves the determination of the total asset value of a corporation or business and reducing that value by the number of its outstanding liabilities. The starting point in using the asset approach is an entity’s NAV (net asset value).  The NAV method within the asset approach is often the appropriate method to use to evaluate an investment holding company formed for the purpose of owning and managing securities of other companies, real estate or natural resources.
  • The essence of the market approach is to use companies in the same general industry as the subject business to provide valuation guidelines. Valuation indicators for such companies or transactions can be determined and analyzed.  As appraisers, we would then make a judgment as to whether investors would find the subject business more or less attractive than such guideline companies.

MPI will determine if one or more of the aforementioned valuation approaches is appropriate for the subject interest/entity.

Preliminary Valuation Conclusions

With due-diligence, financial model review, industry research and internal quality control all complete, MPI delivers its initial conclusions in draft form to the client and/or its advisors.  This first delivery milestone is critical as we will then look for feedback from the client to address any issues that may have been overlooked during due diligence that merit further discussion.  MPI prepares all valuation work as though it could be evidence in litigation, and the MPI Partners responsible for signing each report are always willing and able to testify to the value that is ultimately concluded.

The Documented Report

Once the valuation conclusion has been finalized, MPI begins work on the written report. The report typically consists of text and supporting charts, tables, and exhibits.  It will be prepared in conformity with the Uniform Standards of Professional Appraisal Practice as promulgated by The Appraisal Foundation and the Business Valuation Standards, Principals of Appraisal Practice and Code of Ethics of the American Society of Appraisers.  The report will be fully suited for use in discussions with Internal Revenue Service representatives or in court, if necessary.

The timing from start to finish depends on the complexity of the assignment. MPI keeps the client updated throughout the entire process, and is always aware of any upcoming filing deadlines to ensure that the client and/or its advisors have sufficient time to review in advance.

Post-Issuance of Valuation Report

MPI’s trust and estate valuation experts are willing to stand by their valuation opinions should the IRS audit the transaction or the subject estate.  MPI has eight decades of experience presenting and defending our work product to IRS agents and engineers at the initial audit and appellate levels.  MPI’s valuation experts will work with the IRS to help explain its valuation, understand the report, and answer any questions that the IRS may have to help resolve an audit.  If the client and the IRS cannot agree to a resolution, our senior professionals have the ability and credentials to appear as an expert witness in depositions or in U.S. Tax Court. Contact us today.

Our Office Locations

Get in Touch with our Boston Team:

77 Franklin Street, Suite 403
Boston, MA 02110
(617) 892-6078

Contact: Elliot Rotstein, CAP®

Get in Touch with our Chicago Team:

203 North LaSalle Street, Suite 2100
Chicago, IL 60601
(312) 214-2299

Contact: Tadd A. Lindsay

Get in Touch with our MPI Headquarters:

1000 Lenox Drive
Lawrenceville, NJ 08648
(609) 924-4200

Contact: Mark E. Lingerfield, ASA
Joseph C. Hassan, CFA, ASA

Get in Touch with our New York Team:

10 Grand Central (155 E. 44th Street), Suite 1905
New York , New York 10017
(212) 935-4422

Contact: Daniel M. Kerrigan, CFA
Todd G. Povlich, ASA
John L. Varga, ASA

Get in Touch with our Orlando Team:

5401 S. Kirkman Road, Suite 310
Orlando, Florida 32819
(407) 599-0060

Contact: Roy Meyers, CFA, ASA

Get in Touch with our Philadelphia Team:

Two Logan Square, 100 N. 18th Street, Suite 300
Philadelphia, Pennsylvania 19103
(267) 233-5033

Contact: Mark Lingerfield, ASA
Tracey M. Jasey

Get in Touch with our Connecticut Team:

1720 Post Road East, Suite 214C
Westport, CT 06880
203-893-4244

Contact: William Murray, CPA/ABV/CFF, ASA

Publications

view all publications

By Laura E. Anastasio, ASA, CEIV

Valuation of Intangible Assets

By Todd Povlich, ASA

Estate Planning for Private Fund Principals**COVID-19 Crisis Considerations**

By Koji Bratcher, ASA & Joseph C. Hassan, CFA, ASA

Corporate Planning: Navigating “Value” in Times of Choppy Market Activity

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