IRS’ increased scrutiny of noncontrolling ownership interest valuations calls for additional analyses

In his recent article “The Consideration of Projected Income in the Valuation of Noncontrolling Ownership Interests,” Timothy J. Meinhart (Willamette Management Associates) says “most valuations of nonmarketable, noncontrolling ownership interests in family holding entities are prepared using only one valuation approach—the asset-based approach.” However, appraisers often ignore the projected income associated with the subject noncontrolling ownership interest. The income approach valuation method can incorporate the projected income and required holding period and can provide additional support for the asset-based approach value conclusion.

Read the article here.