Client Challenge
A national provider of exterior restoration and roofing services engaged FairValue Advisors to determine the fair market value of a minority, non-voting interest in the company. The appraisal was required for gift and estate tax reporting purposes. With no market for the subject interest and limitations on liquidity and control, an objective, supportable valuation was essential to meet IRS compliance and withstand potential scrutiny.
Our Role
FairValue Advisors conducted a comprehensive valuation of the company’s equity using both the income and market approaches. Our analysis included:
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Adjusting historical financials and developing normalized projections based on weather-driven revenue patterns.
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Evaluating hurricane recovery demand, claim settlements, and the impact of ongoing legal processes in storm-prone regions.
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Assessing industry-specific factors such as climate risk, roofing material inflation, labor availability, and non-residential market expansion.
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Applying discounts for lack of control, lack of marketability, and non-voting status based on empirical market data and restrictions from the shareholder agreement.
The Result
Our analysis concluded a supportable fair market value of the 1% minority, non-voting interest. The final valuation reflected not only the company’s strong performance and multi-regional presence, but also the realistic limitations imposed by its governance and transfer restrictions. The valuation helped the client achieve tax compliance while aligning with the unique characteristics of the subject interest.
