Fair Market Value is the standard of value for any situation involving taxation as well as for equitable distribution situations in North Carolina and many other states. Fair Market Value is defined in the IRS’s Revenue Ruling 59-60 as:
“…the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. Court decisions frequently state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing, to trade and to be well informed about the property and concerning the market for such property.”
Fair Market Value is different from the real world of transactions; the buyers and sellers in the world of Fair Market Value are hypothetical, and don’t have the motivations or emotion which drive real transactions. CapVal has the experience to factor out the differences between the real world and the statutory world of Fair Market Value.
We understand that “What’s the price?” is only one of the questions, and the answer can vary in different circumstances. The additional questions that need to be answered are really:
Does the price we’re talking about make sense for me as a buyer or seller?
What are the risks of the business that I might not see?
Can the transaction form be adjusted to provide additional financial or tax benefits?
Is the seller offering financing which can make the business more attractive than would be indicated by the theoretical Fair Market Value?
At CapVal, LLC, our goal is not to get a transaction done at any cost. Instead, we focus on helping our clients get the right transaction closed at the right price and in the right form to best suit their needs.