Reasonable Compensation: Application and Analysis for Appraisal, Tax and Management Purposes

October 2010 978-1935081500 Hardcover, eBook, Kindle

Kevin Yeanoplos, Ron Siegneur

Business Valuation Resources, LLC

For many closely held businesses, no single operating expense impacts the profitability as much as compensation does. In all private companies, an expense that is discretionary to the owner in terms of size, timing and payment method may represent not only compensation for services rendered, but also disguises dividends or profit distribution. The valuation of a business could be greatly affected by owner's compensation, or the lack there of. 

This Guide helps practitioners whenever employee-owner compensation is subject to review and adjustment. It is also an invaluable resource when valuing non-compete agreements or calculating personal vs. enterprise goodwill.

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Table of Contents

  • Introduction: What is Reasonable Compensation?
  • Chapter 1: What Guidance Have the Courts Given Business Appraisers Facing a Reasonable Compensation Normalization?
  • Chapter 2: Determining Reasonable Compensation
  • Chapter 3: The Importance of Productivity Adjustments In Reasonable Compensation
  • Chapter 4: A Reasonable Compensation Case Study
  • Chapter 5: Goodwill in Professional Practices
  • Chapter 6: Show Me the Money: Defining Income in Marital Dissolutions
  • Chapter 7: Reasonable Compensation: Can Your Conclusion Survive this 12-point Checklist?
  • Chapter 8: Full Case Law Digests of Key Cases Referred to in this Guide
  • Chapter 9: Sources of Owner/Executive Compensation
  • Appendix A: Reasonableness Of Executive Compensation Economic Analysis Data Sources
  • Appendix B: "If Wishes Were Horses…" The Use of Empirical Data to Support Healthcare Valuations
  • Appendix C: Today’s Best Compensation Databases
  • Appendix D: Reasonable Compensation Teleconference Transcript & Presentation