DAVID HAHN Credentials
Business Valuation
Our valuation team is comprised of certified and designated experts, some with over 30 years of experience, in the industry who service both national and international market segments. This level of experience allows us to consistently provide our clients with exceptional customer service. Along with a solid and honest work ethic, we provide a superior product always compliant with the standards and guidelines of USPAP. Their experience qualifies us to meet the requirements of the Appraisal Foundation, Internal Revenue Service, Lending Institutions and Courts of Law around the country. We work with companies of all sizes, tailoring our expertise to their individual needs.
What Is A Business Valuation?
A business valuation or appraisal is the independent and unbiased process of determining a supportable opinion of the value of a business, business ownership interest, security or intangible asset as of a specified date.
Select An Experienced Valuation Firm
Our valuations are performed by qualified, professional appraisers experienced in all aspects of business valuation and business transfers. Our valuations are performed in compliance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP) as well as the Business Appraisal Standards of the Institute of Business Appraisers. Compliance with industry standards ensures that proven peer-reviewed valuation methods are used to develop defendable opinions of value. Through participation in teleconferences and annual valuation conferences, our appraisers stay abreast of developing valuation issues and related court cases.
Why Perform A Company Valuation?
Sooner of later every business owner needs a reliable company valuation for one or more of a variety of reasons: •Business Sale •Financing •Shareholder Agreement •Shareholder Disputes •Divorce •ESOPs •Estate Planning •Insurance Claims •Gift Taxes •Litigation •Mergers •Partnership Buyout •"C" Corp. to "S" Corp. conversion •Allocation of Purchase Price •Valuation Reports
Valuation Products Available
•Business Valuation Report – A formal summary report that is used primarily for non-litigation situations. This restricted-use abbreviated report is typically all that is needed for determining the selling price of a business or assisting in establishing a buy-sell agreement between partners/shareholders. •Business Appraisal Report – This formal comprehensive report is suitable for litigation support and review by third parties such as the IRS. The report explains in a step-by-step manner what was done and how the value was derived.
Valuation Methods used include:
•Market Methods - utilizes several different databases of market comps including Pratt Stats, Institute of Business Appraiser’s, Bizcomps, Business Broker’s of Florida, and the MidMarketComps database. Multiples of discretionary earnings are used as well as other cash flow multiples.
When applicable, sophisticated statistical techniques such as data modeling and linear regression analysis are also used with the market method to provide superior results.
•Income Approach - Single Period Capitalization Method or Multiple Period Capitalization Method (DCF Model)
•Adjusted Book Value Method with Excess Earnings
•Public Company Guideline Method - used for larger companies
•Analysis of prior sales of stock of the company
If you are unsure about which report is right for your company, call today to speak to one of our Business Valuation Consultants and they will review which report is right for you and your company based on the specific needs of your company.
Reasons and Scope for Valuations
Business/Asset Valuations for Financing - Increasingly, lenders require an independent business valuation prior to approving a business loan or a credit line.
Sale of a Company - Determining the value of a business is the first step in the process of selling a business. A formal valuation performed by an experienced business appraiser will determine the fair market value of your company. A valuation will prepare you to respond to buyer concerns by addressing your company’s value and risk drivers. It will also identify sources of value and areas of your business that can be improved. In addition, knowing the fair market value of your business will prepare you to be a better negotiator.
Exit Strategy Planning - Most business owners do not plan ahead for the time when they will decide to sell their business. Often when they make up their mind to sell, the business isn’t worth what they had hoped; or isn't even be marketable. Don’t wait until a few months before you plan to retire to find out whether or not your company is marketable at a price acceptable to you. Nationally, only 20% of small to medium sized companies listed for sale actually sell. You don’t want to be part of the other 80%.
Unfortunately, ownership transfers are not always voluntary. Often, an unforeseen event, such as the owner’s death, forces the transfer of ownership. Your business planning should begin well in advance of your planned exit from the business; and, it should address both voluntary and involuntary transfers. Your planning should actually begin on day one! A formal valuation with annual updates should be one of the most important tools and an integral part of on-going strategic planning and/or exit strategy planning. Don’t leave your spouse or heirs in the position of having to make the biggest business/financial decision of their lives (i.e., the transfer of your ownership interest) without accurate information as to the fair market value of your ownership interest.
Buy/Sell Agreements - If your business has more than one shareholder, a valuation is required to establish fair market value of the business to determine equity distribution when specified “trigger events” occur. Also, the valuation enables life insurance requirements (funding mechanism for your buy-sell agreement) to be more accurately determined and updated as required.
Estate and Gift Tax - Estate tax returns require an independent valuation as of the date of death. Gifting of closely business interests requires an independent valuation of the business at the time of ownership transition.
Employee Stock Ownership Plan - There are numerous financial and tax reporting situations that require qualified, independent valuation services. Examples include when the company issues stock options or transfers or sells equity interests. A valuation is required for the company to properly report related compensation expense; and, for the recipients to accurately report income.
Litigation Support - A business valuation is often needed to establish economic damages in commercial litigation proceedings; or, to determine equitable distributions in shareholder disputes.
Insurance Purposes – Increasingly, insurance companies require appraisals be done on equipment and/or businesses that are insured.
Intellectual Property Valuation - In today's increasingly complex and highly regulated business environment, the accurate and complete valuation of intellectual property is essential.
Foreclosures – A machinery and equipment appraisal or business valuation is almost always necessary during a foreclosure of a business to determine the fair market value of all assets.
Divorce/Estate Settlements - A business is typically the largest joint marital asset and the most difficult to value. A business valuation will either be court appointed or voluntarily engaged, to facilitate an equitable distribution settlement.
The scope of our FINANCIAL VALUATION services includes:
Mergers & Acquisitions Valuation
Shareholder Liquidity Services
Bankruptcy & Restructuring Valuations for
Corporate Transaction Services
Intellectual Property Services
Tax Related Services
Accounting/SEC Review
COMMERCIAL REAL ESTATE APPRAISAL
Appraisal Solutions
We provide a broad and diverse range of appraisal solutions. We can provide services to this list of property types.
Property Types:
Property Types
•Commercial - office, retail
•Apartments (5+ Units)
•Mixed Use
•Medical Facilities
•Industrial / R & D
•Manufactured Home Parks
•Land - Commercial, Industrial, Residential, Subdivided, Acreage, Open Space, Contaminated/ Stigma
•Car Wash Facilities
•Convenience Stores
•Gas Stations
•Restaurants
•Hotels/Motels, Resort, Bed & Breakfast, Timeshare Conversion, Timeshare Units
•Senior Housing - Skilled-Nursing, Assisted-Living, Congregate Care, Alzheimer, etc.
•Shopping Centers
•Hospitals, Assisted Living Facility
•Other Special Purpose - Student Housing, Charter Schools, Restaurant/ Bar/ Nightclub, Movie Theater, Church, University/ College, Day Care, Greenhouse/ Nursery, Outdoor Advertising Sign, Lumber Yard, Veterinary Clinic, Kennel, Bank Branch, Auto Dealership, Pay Parking Garage/ Lot, Corporate Headquarters, Historical Register
Portfolio Valuations
Large numbers of properties can be appraised on both an individual basis and/or as a whole.
Purpose and Use of Appraisal:
We appraise commercial property for a variety of purposes including:
•REO / foreclosure asset evaluation
•Property tax assessment review and appeals / abatements
•Discounts to partial interests for lack of control (DLOC) & marketability (DLOM)
•Expert witness testimony / litigation support
•Dispute resolution (divorce / partnership dissolution / zoning issues)
•Arbitration / Mediation
•Defaulting CMBS assets
•Divorce proceedings
•Estate Settlement
•Prospective valuation
•Retrospective valuation
•Portfolio valuation
•Sale or asking price determination
•Financial reporting (ASC 805, 820, 360)
•Buy / sell agreements
•Divestitures
•Eminent domain / condemnation
•Loss in value estimate due to contamination and other detrimental conditions
•Price allocation (business value or goodwill, real property, personal property)
•Estate planning, gifting, estate settlements, probate
•Land utilization studies
•Retrospective dates of value
•Determination of investment value based on client's investment criteria
•Partial & fractional interests (shares in partnerships, LLC's, ground leases, etc.)
•Financing / refinancing
ESTATE AND GIFT TAX VALUATION
Assets for Gift and Estate Tax Planning
Our team of experts will help you analyze your business processes, identify areas for improvement, and develop strategies to achieve your business goals.
We are experts in the valuation of assets for gift and estate and gift tax planning. We use the latest available information regarding transactions of similar entities and quantitative discount models to determine the fair market value of partnership interests. We work closely with our clients' legal and financial advisors to ensure that our work is conducted in a professional, timely, and economical manner.
With constant and often complex changes in the estate and gift tax code, it is crucial to have a professional valuation team assists in capturing all of the business owners’ potential tax savings. The goal of Estate and Gift Tax Planning is to adequately provide liquidity for the owner’s estate; provide for continuation of the business and to minimize gift, estate and generation-skipping transfer taxes.
For high net worth individuals holding real property and marketable securities, a valuation is essential to preserve their assets for future generations. A business owner’s needs for estate planning will vary over the owner’s life cycle. In the early years, buy-sell agreements and insurance protection are typically the highest priority. As an owner progresses in their life cycle then transfer planning, and possible charitable giving, become more prominent in their estate planning needs.
An estate tax planning valuation needs to be clear about the interests being valued. Discounts from net asset value must be documented. The fair market value of a limited partnership interest and the value of a limited partner's pro rata portion of the partnership's net asset value are not equal; this difference is commonly referred to as a “discount”. The use of the Family Limited Partnership vehicle combined with appropriate discounting can significantly reduce the estate and gift tax burden on asset transfers between family members.
We Perform Discounts Studies for:
•Family limited partnerships
•Limited liability companies
•Partial ownership interests in assets such as real estate, business, or plant
These reports include discounts for lack of control and marketability, as well as blockage discounts for ownership of securities in publicly held corporations.
All gifted or bequeathed assets must be assigned a value for federal transfer tax purposes. Consequently, the determination of such value serves critically to the estate planning process. Many estate and gift planning techniques are subject to intense scrutiny by the IRS, and any undervalued assets may be subject to tax penalties. Penalties are less likely to be levied if a valuation has been performed in good faith by an independent third party appraiser. A qualified appraisal prepared by a competent professional appraiser helps establish a "reasonable basis" for the valuation.
Other Techniques
Other commonly used estate planning techniques include:
charitable remainder trusts, charitable lead trusts, private foundations, private annuities, generation-skipping trusts, Grantor-Retained Annuity Trusts (GRAT), Qualified Personal Residence Trust (QPRT), annuity trusts.
Our reports document the methods used to arrive at these discounts to comply with the IRS guidelines described in Revenue Ruling 59-60. Each situation is different and a valuation professional needs to carefully consider which discounts apply and to what extent.
Our analysts have extensive experience in preparing and supporting valuations for tax purposes. We perform extensive independent research and draw on years of industry experience to provide the most supportable, well reasoned analysis possible. Our valuations have withstood the scrutiny of the IRS and other third parties.
The following are some of the tax related issues we assist our clients with:
•Valuations of closely held businesses interests and FLPs in support of gift or estate tax returns
•Valuations of securities donated to a charity
•Valuation of common stock for stock option issued to employees - Nonqualified deferred compensation – Sec. 409A
•Determination of built-in gains tax – Subchapter S and Sec. 382
•Valuations of underlying Real Estate Assets
•Valuations of Plant, Machinery & Equipment Assets
COST SEGREGATION STUDY
COST SEGREGATION STUDY
New Tax Law
New Tax Law - The Tax Cut and Jobs Act, 12/22/2017 Good News - 100% Bonus Depreciation for 20 years-life segregated property classification can be allowed for the property placed after September 27, 2017.
Bonus Depreciation:
100% Bonus Depreciation for the less than 20 years-life segregated property classifications (i.e. 5-years, 7-years, 15-years) can be allowed for the property placed after September 27, 2017.
The Act extends and modifies the additional first-year depreciation deduction for qualified depreciable personal property by increasing the 50% allowance to 100% for property placed in service after September 27, 2017, and before 2023. After 2022, the bonus depreciation percentage is phased-down to 80% for property placed in service in 2023, 60% for property placed in service in 2024, 40% for property placed in service in 2025, and 20% for property placed in service in 2026.
Example - Actual Case I Performed
14-Story Office Building
Purchase Price - $37,170,000
Improvements Basis (for Cost Segregation) except Land - $30,985,316
After Cost Segregation
5-year life class - $5,888,901
(19.01% of the improvements basis)
7-year life class - $154,563 (0.50%)
15-year life class - $324,665 (1.05%)
Total eligible for 100% Bonus Depreciation at the first year (5, 7, 15 years class combined) under the new tax law:
$6,368,129
If under the old tax law prior to 09/27/2017, apply the double-declining balance method, the first year (5, 7, 15 years class combined), the depreciation will be:
$2,432,923
That is the increase of depreciation benefit of $3,935,206 at the first year.
Assuming a tax bracket of 37% for married filing jointly over $600,000, additional tax savings will be $1,456,026 depending on the individual or entity's tax situation.
Cost Segregation Study Benefits
Take a huge tax deduction by doing the Cost Segregation. Under the alternative depreciation system, as modified by the Act, the recovery periods for nonresidential depreciable real property, residential depreciable real property and qualified improvements are 40 years, 30 years and 20 years, respectively.
The Act extends and modifies the additional first-year depreciation deduction for qualified depreciable personal property by increasing the 50% allowance to 100% for property placed in service after September 27, 2017, and before 2023. After 2022, the bonus depreciation percentage is phased-down to 80% for property placed in service in 2023, 60% for property placed in service in 2024, 40% for property placed in service in 2025, and 20% for property placed in service in 2026. The bill removes the requirement in current law that the original use of qualified property must commence with the taxpayer. Thus, immediate expensing applies to purchases of used as well as new items.
What is Cost Segregation?
Something called cost segregation may help owners of commercial real estate save significantly on their federal income taxes. The primary goal of a cost segregation study is to identify all construction-related costs that qualify for accelerated income tax depreciation. Small or large, your business can save money with a cost segregation study, typically many times the amount you invest. The Benefits of Cost Segregation We perform a detailed analysis of your commercial property for the purpose of identifying all of the construction related expenses that can be depreciated over 5, 7 and 15 years. The result of our study is the accelerated depreciation of these deductions, reducing your tax liability and increasing your cash flow.
Under Old Tax Law
The Benefits of Cost Segregation (applicable to prior to 09/27/2017)
Cost Segregation is a tax planning tool that determines how quickly an owner should be depreciating the property on his income taxes — five years, seven years, 15 years, 27.5 years or 39 years. The Internal Revenue Service allows owners of commercial properties to accelerate depreciation on their real estate, which will result in reducing the property owner’s taxable income levels. A cost segregation study is an in-depth analysis of the costs incurred to build, acquire or renovate a real estate holding.
Qualifying Properties:
Hotel/Motel, Gas Station/ Car Wash, Industrial/ Warehouse Building, Apartment, Office Building, Grocery Store, Restaurant, Retail, Nursing Homes, Golf Course, Auto Related, Leased Tenant Improvements.
Any commercial/investment real property placed into service since January 1st, 1987 may benefit from a Cost Segregation Study (CSS):
Critical timing is when the property was placed into service by the current owner / taxpayer, not when the building was originally constructed.
•New construction, including renovation, remodeling, restoration, or expansion to an existing building
•Property acquired via purchase
•Property acquired via inheritance
•Property which received step-up in basis
•Major leasehold improvements
Certain types of buildings benefit from a CSS more than others. Those are the types of buildings that tend to contain:
•More specialty plumbing, electrical, HVAC system, etc.
•Higher amount and quality of personal property
•Extensive land improvements
Classification from real property to land improvements and personal property: Examples of Qualifying Properties:
» Airports
» Apartment Buildings
» Assisted Living Facilities
» Automobile Dealerships
» Bank Branches » Casinos
» Cinemas
» Day Care Facilities
» Department Stores
» Distribution Centers
» Fitness Centers
»Food Processing Facilities
» Funeral Homes
» Gas Stations
» Golf Courses
» Grocery Stores
» Hospitals
» Hotels/Motels
» Industrial Facilities
» Laboratories
» Manufacturing Facilities
» Marinas
» Medical Centers
» Medical Facilities
» Mixed-Use Facilities
» Nursing Homes
» Office Buildings
» Parking Lots
» Pharmaceutical
» Physician Practices
» Public Utilities
» Research Facilities
» Retail Centers
» Resorts
» Restaurants
» Shopping Centers
» Sports Facilities
» Storage Facilitie
» Warehouses
Range of average benefits
Property Type Basis Reallocation
Apartment Buildings 20 - 50%
Office Buildings 10 - 40%
Restaurants 10 - 40%
Hotels 15 - 40%
Light Manufacturing 15 - 40%
Heavy Manufacturing 25 - 70%
Grocery Stores 15 - 50%
Retail Facilities 15 - 40%
Warehouses 8 - 30%
Processing Plants 15 - 40%
R & D Facility 20 - 50%
QUALIFICATIONS OF PRINCIPAL
David Hahn, CVA, MAFF, ASA, CM&AA, CCIM, MBA, has been in the Business Valuation, Cost Segregation Study/ Purchase Price Allocation Study, Renewable Energy Company Valuation, Capital Assets Valuation, Commercial Real Estate Appraisal, and other valuation appraisal practices since 1985. He is a principal of Alpha Appraisal Consulting Group, specializing in both intangible and tangible property types such as business, real, personal, contractual, intellectual and fractional properties. The firm provides solutions for, and in tandem with, Attorneys, CPA's, Financial Advisory Groups, Governments, Lending Institutions, Corporations, Individuals and others within the realms of Forensic Economics, Property Tax Consulting, Forensic Accounting, Real Estate, Intellectual Property, Trust & Estate and Business Transfers and M&A along with others requiring valuation solutions. He ia an expert in Calculation of Economic Damages in the areas of: Business Lost Profits and Intellectual Property.
He provides solvency opinions when lender requires for financing highly leveraged transactions as well as bankruptcy & restructuring proceedings. He is current on the Gift & Estate Tax Valuation. He is an avid practitioner in the Fair Value Financial Reporting not only meeting the FASB requirement, but also meeting the IFRS. He is a Certified Commercial-Investment Member (CCIM) and provides services for Cost Segregation Studies and Commercial Real Estate Appraisals associated with Going-Concern Intangible Value (he is a State Certified General Real Estate Appraiser).
David Hahn, ASA, CVA, MAFF, CM&AA, CCIM, MBA
· Economics, Appraisal, Valuation, & Consulting practices in multi-disciplinary assets including business, real estate, and fixed assets since 1985.
· Certified Business Valuation Analyst (CVA) credential from the (NACVA)
· Certified Commercial Investment Member (CCIM)
· Certified Merger & Acquisition Advisor (CM&AA)
· Master Analyst in Financial Forensics (MAFF) credential from the National Association of Certified Valuation Analysts (NACVA)
· Accredited Senior Appraiser designation of the American Society of Appraisers (ASA)
· Member of the American Academy of Economic and Financial Experts (AAEFE)
· Hawaii State Certified General Real Estate Appraiser #CGA-1171
· Certified Mediator (Finished 40-hours Training)
· Certified Auctioneer (Finished 80-hours Training from Missouri Auction School)
· Association of Insolvency & Restructuring Advisors (AIRA) - member
· Certified Mediator, completion of Mediation Training Course Approved by the Association for Conflict Resolution, Trainer: Brigid Duffield, Esq
· Alliance of Merger & Acquisition Advisors - member
· American Bankruptcy Institute - member
· College Instructor's Credential - Business & Real Estate Instructor Certified through THE TRAIN THE TRAINER program - CCIM Institute
· Taught USPAP, Commercial & Business Appraisals, Financing, Commercial Investment, more than 5,000 classroom hours since 1985.
· Competent Toastmaster (CTM) certificate from Toastmasters International
· B.S. in Industrial Technology/Computer Science, Minor in Business - San Jose State University - 1981
· Control Data Corporation, San Jose, Business Systems Analyst, 1981-1983
· Lockheed Missiles and Space Company, Systems Analyst, 1983-1985
· Executive MBA - 1983 . USC, Public enterprise cost/benefit analysis graduate course, 1993
. UCLA Executive Management Program certificate - 1995
· Doctoral Studies, Public Administration, University of La Verne, 1995-1998
. U.S. Army veteran - active duty for 3 years - honorable discharge, 1979