Situation

The owner of eSolutions planned to set up a program by which approximately ten percent of his company’s shares would be gifted to his children. Because the gift was comprised of more than $10,000 in stock, the owner needed to obtain an independent, third-party appraisal. The IRS requires a business valuation to be performed by a qualified appraiser if the value of a gift of closely-held stock exceeds $10,000.

Engagement

The owner of eSolutions retained Mariner Capital Advisors to determine the percentage of ownership in eSolutions that would equal a predetermined dollar amount. This required us to first determine the value of eSolutions as a whole on the date of the gift, and then determine appropriate minority interest discounts to derive the value of a single share of stock in the company. Once we obtained the value for a single share of stock, we backed into the desired gift value, ultimately determining the specific number of shares and partial shares that would be equivalent to the predetermined dollar amount of the gift.

Result

The owner of eSolutions was pleased with the result and engaged Mariner Capital Advisors multiple times in the following years to provide valuations for additional gifts of stock to his children.

This document is for informational use only and may be outdated and/or no longer applicable. Nothing in this publication is intended to constitute legal, tax, or investment advice. There is no guarantee that any claims made will come to pass. The information contained herein has been obtained from sources believed to be reliable, but Mariner Capital Advisors does not warrant the accuracy of the information. Consult a financial, tax or legal professional for specific information related to your own situation.