Substantiated Reduced Tax Liability

Business Valuation Ensured Compliance with IRS 409A


Experiencing hypergrowth of 170% in three years, a large, privately-owned group dental practice and Dental Support Organization (DSO) on the west coast was using stock grants to attract and compensate new professional executive managers.  The company and a newly-hired officer needed a business valuation of the stock for IRS Section 409A compliance. 

Merrimack Business Appraisers’ Approach

Lou Pereira’s methodical and thorough valuation included quantitative and qualitative analysis. By applying an income approach using a discounted cash flow method, he was able to fully explain and substantiate the value determination. In addition, providing a market perspective, with transactions of other high-growth acquisition targets, further supported the valuation. This comprehensive approach was important to ensure that the company would meet the IRS’s stringent requirements for compliance with Section 409A.

Valuation Outcome

Compliance with IRS Section 409A was attained and tax liability for the company was reduced.


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