ESOP minimizes goodwill by applying valuation technique

Client Description

A construction company with national reach

Problem

The construction company acquired a large specialty contractor, which presented the challenge of understanding the valuation and accounting for differences in value affected by the ESOP’s non-taxed status.

BerryDunn’s Solution

BerryDunn experts worked with our client to:

• Gain an understanding of the acquired company’s asset valuation report
• Interpret and apply the valuation results to the ESOP’s non-taxed status

Outcomes

Our business valuation experts worked with management to understand the asset valuation report. Because of the ESOP’s non-taxed status, the tax amortization benefits overstated the value of the assets to the company. With guidance from our business valuation group, management was able to isolate the tax effects of the valuation and properly account for the acquired assets, reducing the value of the intangible assets recognized in the transaction.

*Identifying information was changed to conceal our client's identity.