Laura Lemco, a certified valuation analyst, learned the hard way that without proper planning, business owners who pass away suddenly can leave their families with the heartache of having to pay huge amounts of estate taxes.
“My dad died unexpectedly without having any planning in place, so we had to pay hundreds of thousands of dollars to the state of Rhode Island that we wouldn’t have had to pay if he’d had a plan,” she said. “This is why I’m passionate about valuation services; it happened to me, and I don’t want it to happen to you.”
Lemco, an Oregon native who attended Oregon State University, recently returned to the region from Colorado, and upon doing so joined forces with Capstone Certified Public Accountants in Bend in a merger that became effective November 1. The partnership creates a complete accounting and valuation services team that can help business owners in determining the value of their company. This is a process that must take place in certain situations, such as death or divorce, and should take place well ahead of any major life changes when possible. By combining knowledge and resources, Capstone and Lemco, owner of Cascade Valuation Services, can provide the full gamut of needed assistance to business owners or their heirs who must determine the value of a company, and/or in formulating an exit strategy.
“We are helping each other,” says Lemco, who has more than 20 years of experience managing operations, consulting with business owners, performing financial analysis and preparing business valuations. She holds a master’s degree in Business Administration and accreditation as a certified valuation analyst. “I’m an analyst, not an accountant. But now I’m in an office with accountants, so we can cross-reference with each other. Having people who know tax law to consult with is huge.” She adds, “Having a team expedites an appraisal. I can’t do it in a week, but a team can. You need a team, where everybody has their area of expertise.” Adding to the new valuation side of Capstone is Mitch Viner, business analyst, who will be working closely with Lemco. Viner is a recent graduate of Oregon State University who has a bachelor’s degree in Business Administration.
“There are the four Ds that can happen at any time: death, divorce, dispute or disability,” says Lance Brant, managing partner of Capstone CPAs. “When these happen, the reality is that a wife may get stuck with a problem if her husband dies without a plan in place. It’s much better to be prepared ahead of time. Succession and exit planning are very important.” He adds, “You want to use the ‘S’ in valuation, which stands for ‘succession’ or ‘successful’ planning, rather than the four Ds. Unfortunately, about 80 to 90 percent of valuations are due to the Ds rather than the S. We want to change that.” Business valuations can also be needed during corporate litigation, for SBA loans and for expert witness testimony.
When Lemco decided to move back to Oregon, she reached out to Capstone about creating a partnership, and the merging of minds has been a win-win, says Brant. “Our firm is growing so fast. We are in three cities, and possibly going to be in five by next year,” he says. “This valuation service adds a lot. We think it’s a great add-on.” He continues, “Bend is unique. There is lots of tourism, but there are lots of good small businesses too. They are here because they want to be here, and we can serve them and help them grow. This adds to the infrastructure of Bend.”
Lemco anticipates a “tidal wave” of valuations now that people are working on recovering from the COVID-related closures. She and Brant agree that there is a shortage of valuation analysts in Central Oregon, and those who are here are exceptionally busy. “This is a plus for the community,” he says. “It will help the community to have a local resource. It’s really needed.” Lemco adds, “Business owners almost always come to us because they are told they have to. We’d love to be the referred company. We hope to have attorneys and CPAs and even wealth managers refer us.” She continues, “We perform actual appraisals that will hold up in court. We follow the accredited standards.”
The valuation services provided by Lemco and Capstone are for commercial businesses, not personal property or real estate. “If you have a growing business, you typically have investing partners buying in and buying out, and a valuations department can help with the transition,” says Brant. “People try to figure out their net income for the year, but they should really figure out what their business is worth.”
When a business owner comes to Lemco for help, she evaluates everything going on both outside and inside of the business that drives its value, she says. “I deep-dive the analysis. This is all written out in a very clear, substantiated report. Most owners want the highest value possible for their business, and they can use the report to learn how to improve and drive up that value.” For example, if an area of the business is underperforming, a valuation can reveal the weak link so that it can be eliminated or improved upon. “Doing this well in advance of a change can really make a drastic improvement,” says Lemco. “It’s a tool to use to learn how to streamline and improve business; this is good for all of us.” She adds, “You check your bank account balance regularly; why don’t you know the value of your business?”
Moving forward, Lemco and Brant say they want to offer exit-planning educational seminars, but are finding it difficult to do so at the moment because of COVID. “The best way to grow a business is face to face,” says Brant. “COVID has made that tough.” They particularly hope to educate clients about estate tax rules, which may change over the next three to five years. “Everyone wants to live here, but you don’t want to die here without a plan,” he says. “There are very high estate taxes here. For business owners who have more than a million dollars in net worth, you could pay a lot of taxes. All CPAs and attorneys should be telling their clients this, and we can help.”
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