Client Challenge
A growing software-as-a-service (SaaS) company required a defensible valuation of minority equity interests for gift, estate, and income tax reporting. The company had recently undergone a leadership transition and corporate restructuring, resulting in a new capitalization table that included multiple share classes. The client needed a valuation partner capable of navigating complex equity instruments, assessing intangible value, and supporting IRS compliance.
Our Role
FairValue Advisors was retained to determine the fair market value of the company’s equity on a non-controlling, non-marketable basis. Our engagement included:
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Analyzing a multi-class capital structure with preferred and common shares.
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Evaluating investor-specific rights such as conversion privileges, redemption rights, and dividend preferences.
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Assessing recurring revenue, customer retention, and positioning within the competitive CRM and enterprise software sectors.
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Benchmarking financial performance against comparable public SaaS companies and relevant precedent transactions.
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Applying both income (DCF) and market approaches, with appropriate discounts for lack of control, marketability, and voting rights.
The Result
Our independent valuation supported a fair market value conclusion consistent with IRS and Treasury regulations. The analysis provided a clear, supportable basis for the company’s advisors to finalize estate and tax planning strategies. The report addressed the nuances of the company’s equity structure and market dynamics, equipping the client with a valuation that could withstand regulatory scrutiny.
