Purchase Price Allocations

A gift or estate tax valuation determines the fair market value (FMV) of private business interests or other assets transferred as part of a gift or inheritance. These valuations are typically used for IRS Form 709 (Gift Tax Return) and Form 706 (Estate Tax Return) to ensure compliance and accurate reporting.

The IRS requires a qualified appraisal when:

• You gift business interests, shares, or real property above exemption thresholds
• You’re settling an estate that includes privately held assets
• You're transferring ownership through trusts or family entities (e.g., FLPs, LLCs)

• Compliance with IRS regulations
• Proper allocation of the lifetime gift and estate tax exemption
• Minimization of audit risk and potential penalties

Gift and estate tax valuations are commonly required for:

• Closely held business interests (corporations, LLCs, partnerships)
• Family limited partnerships (FLPs)
• Minority or non-controlling ownership interests
• Fractional real estate or investment holdings
• Assets held in trusts or passed through a will

You may need a valuation if you are:

• Gifting shares of a family or private business
• Transferring ownership to heirs, trusts, or a spouse
• Settling an estate with illiquid assets
• Working with an estate planning attorney or tax advisor
• Concerned about IRS audit exposure

The IRS requires valuations to be conducted by a “qualified appraiser”—a professional with:

• Formal valuation credentials (e.g., CVA, ASA)
• Relevant experience with similar assets
• Independence from the parties involved

Gift and estate tax valuations typically rely on one or more of the following standard valuation approaches:

• Market Approach – Uses comparable company data and recent transactions
• Income Approach – Projects future cash flows and discounts them to present value
• Cost Approach – Assesses the company’s net assets or replacement costs

We select the most appropriate combination of methods based on your gift or estate tax situation.

To conduct a defensible valuation, we typically request:

• 3–5 years of business financials or tax returns
• Cap table or ownership breakdown
• Organizational documents for the business
• Buy-sell agreements (if applicable)
• Recent appraisals, transaction history, or partnership agreements

A 409A valuation determines the fair market value (FMV) of a private company’s common stock. It is required under Section 409A of the Internal Revenue Code and is essential for setting the exercise price of stock options granted to employees, advisors, and service providers.

By establishing FMV, a 409A valuation ensures your equity compensation plans are IRS-compliant and defensible.

A 409A valuation is legally required when issuing stock options in a private company. Without it, your company risks:

• IRS penalties for discounted stock options
• Immediate income recognition and tax liabilities for employees
• Exposure to interest and additional taxes under Section 409A

You should obtain a 409A valuation from a qualified, independent valuation firm with expertise in startup and private company equity.

Whitehawk Advisory specializes in 409A valuations, combining IRS-compliant methodologies with a deep understanding of early-stage and growth-stage companies.

Using an experienced valuation firm like Whitehawk ensures:

• Full compliance with IRS, AICPA, and USPAP standards
• A valuation that stands up to audit scrutiny and due diligence
• Objective, supportable analysis from credentialed professionals
• Peace of mind for founders, CFOs, boards, and investors

You should update your 409A valuation at least every 12 months and after any material event, such as:

• New funding round
• Secondary sale of stock
• Acquisition discussions
• Major changes in revenue, profitability, or business model

Get your first 409A valuation before granting your first stock options. This typically occurs:

• After your first priced funding round
• When formalizing an employee equity plan
• If you’re planning to issue options to early employees or advisors

Early valuations set the stage for compliant equity compensation and avoid retroactive tax exposure.

409A valuations typically rely on one or more of the following standard valuation approaches:

• Market Approach – Uses comparable company data and recent transactions
• Income Approach – Projects future cash flows and discounts them to present value
• Cost Approach – Assesses the company’s net assets or replacement costs

To conduct your 409A valuation, we typically request:

• 3 years of historical financials (or projections for early-stage startups)
• Cap table and equity agreements
• Pitch deck, investor term sheets, or recent funding documents
• Product roadmap or business model overview
• Details on significant contracts, partnerships, or IP

Exit planning is the strategic process of preparing a business for a successful transition—whether through a sale, merger, internal succession, or recapitalization. It involves aligning financial, operational, and personal goals to maximize business value, reduce risk, and ensure a smooth transition for owners and stakeholders.

Without a well-structured exit plan, business owners risk:

• Leaving money on the table at exit
• Facing tax inefficiencies or legal complications
• Experiencing delays or failed transactions
• Disrupting operations, employees, or customers during transition
• With expert planning, you can increase valuation, minimize taxes, and exit on your terms.

If you own a business and plan to exit within the next several years, you should start planning now. Common scenarios include:

• Retirement or semi-retirement
• Sale to private equity or strategic buyers
• Succession to family or key employees
• Partner buyout or shareholder transition
• Unsolicited offers from third parties

Our exit planning process typically includes:

• Business valuation and readiness assessment
• Value enhancement planning (profitability, processes, risk)
• Succession or transaction strategy development
• Tax and legal structure review
• Collaboration with legal, tax, and M&A advisors

Exit planning is most effective when started 2 to 5 years before an exit, allowing time to:

• Improve value drivers
• Optimize financials
• Mitigate operational or legal risks
• Position the business for buyer interest

Valuation is the foundation of any exit plan. Knowing what your business is worth—and why—allows you to:

• Set realistic goals
• Understand value gaps and opportunities
• Evaluate buyer offers with confidence
• Benchmark progress as you prepare to sell

Exit planning is the preparation—a proactive process that strengthens your business and personal outcomes.

Selling a business is the transaction—usually the final step. Exit planning positions you to:

• Exit on your timeline, not someone else’s
• Maximize after-tax proceeds
• Protect your legacy and team
• Avoid costly surprises during due diligence

Whitehawk Advisory works with owners in a variety of sectors, including:

• Technology and SaaS
• Healthcare Services and Technology
• Oil and Gas
• Manufacturing and Industrials
• Consumer Products and Distribution

We understand how value is created and measured across different industries—and how buyers evaluate each.

Whitehawk Advisory offers a rare combination of:

• Valuation expertise, with 400+ engagements completed
• M&A experience, with $550M in deal value across 4 continents
• Strategic insight, tailored to your personal, financial, and business goals

Recapitalization in the context of valuation services provided by Whitehawk Advisory is a strategic restructuring of a company’s debt and equity mix to support long-term goals such as:

• Simplifying overly complex equity structures
• Bringing in new investors
• Reducing financial risk
• Preparing for a future exit or succession
• Buying out partners or shareholders

You may consider a recapitalization if your business is:

• Experiencing rapid growth or hitting a plateau
• Preparing for a sale or generational transfer
• Taking on new partners or private equity
• Seeking to reduce debt or rebalance ownership
• Looking to give shareholders partial liquidity without a full exit

Common forms of recapitalization include:

• Equity recapitalization – Issuing or exchanging ownership to realign control or bring in investors
• Debt recapitalization – Refinancing or restructuring debt to improve cash flow or reduce risk
• Leveraged recapitalization – Taking on debt to finance a partial owner buyout or dividend
• Preferred equity – Bringing in structured capital that offers flexibility without immediate dilution

A full business sale transfers ownership and control. A recapitalization preserves your role while restructuring capital to:

• Reduce personal financial exposure
• Provide liquidity to shareholders
• Bring in growth capital
• Prepare for future sale or succession

A defensible, independent valuation is critical to:

• Determining fair equity splits or buyout pricing
• Negotiating with private equity or family offices
• Structuring preferred shares or convertible debt
• Satisfying fiduciary duties to shareholders or boards

Our recapitalization process typically includes:

• Business valuation and capital structure assessment
• Liquidity and ownership objectives planning
• Investor or financing strategy development
• Financial modeling and scenario analysis
• Coordination with legal and tax advisors

At Whitehawk Advisory, we combine valuation accuracy with transaction insight. Led by Managing Director Alex Klingelberger, who has advised on over $550 million in deal value and more than 400 valuation engagements, we help owners:

• Unlock liquidity while staying in control
• Navigate complex capital structures with confidence
• Prepare for future sale, succession, or growth

A litigation support valuation is a formal, defensible business or asset valuation used in legal matters where financial value is in dispute. These engagements often involve:

• Shareholder or partnership disputes
• Marital dissolution (divorce)
• Business damages or lost profits claims
• Estate or fiduciary litigation
• Fraud, insolvency, or breach of contract cases

You may need a litigation valuation when:

• Ownership value is contested, such as in buyouts or partnership disputes
• You’re dividing business interests in a divorce or estate settlement
• A party claims economic damages or lost business value
• A court or arbitrator requires an independent expert appraisal
• You're involved in a business interruption or contract dispute

Litigation valuations require:

• Heightened documentation and defensibility
• Adherence to legal evidentiary standards (e.g., Daubert or Frye)
• Detailed support for assumptions, methods, and conclusions
• The ability to testify as an expert witness, if needed
• Clarity in communicating complex financial issues to non-technical audiences

We frequently address valuation issues such as:

• Fair market value vs. fair value disputes
• Discounts for lack of control or marketability
• Valuation date conflicts or retrospective valuations
• Personal vs. enterprise goodwill separation
• Economic damages based on lost profits or business interruption

Depending on the matter, we may need:

• Financial statements or tax returns
• Operating agreements or shareholder contracts
• Emails, contracts, or correspondence related to the dispute
• Expert reports from the opposing side
• Any court filings, discovery materials, or interrogatories

Whitehawk Advisory brings depth, credibility, and clarity to high-stakes litigation. Our clients rely on us for:

• Defensible, court-ready valuation reports
• Expert witness capabilities from Alex Klingelberger, a veteran advisor with more than 400 valuation engagements
• Experience working alongside attorneys in shareholder disputes, divorce litigation, and economic damages claims
• Independence, responsiveness, and a focus on both detail and communication