Business Valuation and More in Boston, MA
Business valuation and litigation support sub-specialties.
If you are an individual looking for help filing your personal tax return or a small business owner looking for a person who can help guide you to the next level, while preserving the cash flow you have, contact us. At MacKenzie & Company LLC, we are committed to help you meet your compliance deadlines and understand the tax code, so you can focus on what you do best – grow your business.
Mr. MacKenzie is the Founder of MacKenzie & Company LLC , bringing to the firm more than 18 years of experience as a CPA, a business appraiser, and advisor. Mr. MacKenzie has assisted clients in Probate and Family Courts in Suffolk, Middlesex, Norfolk, Essex, and Plymouth counties in family law matters.
Mr. MacKenzie is considered a leading expert in business valuation of closely held businesses, medical practices, and technology companies. Focusing on all aspects of value consulting Mr. MacKenzie is committed to using his knowledge and experience to assist clients through the process and add value along the way.
A well-regarded public speaker, Mr. MacKenzie has spoken at numerous family law courses and seminars through Massachusetts Continuing Legal Education and the Massachusetts Bar Association.
He has prepared business valuations for the owner and the non-owner spouse and has been qualified as an expert in business valuation, forensic accounting and generally accepted accounting principles in state and federal court.
Both business valuation and forensic accounting are skills that are refined over time and experience. As a CPA, Mr. MacKenzie has seen hundreds of examples of where owners intentionally inflated or deflated the value of the business for their own selfish purposes. Looking beyond the financial statement or tax return is his specialty.
Mr. MacKenzie has provided litigation support services to dozens of the largest law firms in New England. These law firms represented entities of varying sizes; from small single person service firms to a one thousand person manufacturing company; from two hundred thousand dollars in revenue to over one billion.
With over 18 years of experience Mr. MacKenzie has prepared hundreds of financial models documenting the damages incurred, out of pocket expenses, business interruption losses, and other calculations as needed. Additionally he has reviewed, analyzed and offered rebuttal testimony concerning damage calculations prepared by others.
It is unfortunate but true, bad things happen to good people and companies. Hurricanes, snow storms, and earthquakes are some of the most common natural events that can interrupt your business. However, business interruptions can occur when parts fail, a fire occurs when a contractor simply forgets to tie off a live wire, or floods destroy equipment preventing normal ongoing operations.
As a result, you suffer an interruption in operations that impacts cash flow substantially. You even incur additional expenses in attempting to mitigate your loss, but the end result is your business interruption now needs to be quantified, documented and submitted to either the insurance company or to a court of appropriate jurisdiction.
Your customer list walks out the door; the proprietary software is downloaded by your best salesperson who goes and sets up a competing business or starts working for an established competitor and the profits you counted on are lost. Lost profits occur when faulty products are used in the final assembly of your product; when an individual is able to siphon funds to phantom vendors; when business opportunities that should have been your companies are diverted to another. Knowing how to calculate these damages can be difficult and document intensive. Our experience will make the process smooth and allow you to focus on getting back to business.
Please note, most people use lost profits and damage models interchangeably – we see no material difference in the terms unless there is legal precedent or guidance that needs to be applied, we will work with the respective attorney to clarify distinction of lost profits versus damage model accordingly.
These typically break down into two categories; one shareholder has been unjustly enriched by some action and the other shareholder(s) want parity; or there is a total breakdown in the structure and it needs to be valued so the parties can move on. In either case, the shareholders need resolution and quickly – no one wants to continue to be involved in an unhealthy situation (financially or emotionally). Getting to the finish line with a number everyone can agree to (and financially achieve) is our goal.
Often the legal aspects of a case require the advisor to understand the business, financial, tax and property considerations. Mr. MacKenzie’s experience and reputation as a highly competent, objective and authoritative financial expert make him an excellent choice to assist you in any matter.
Forensic accounting is the practice of accountancy that is more commonly described as asset tracing. Asset tracing refers to examining financial documents and developing on understanding of how cash (or other assets) were improperly removed from the entity. This is done through exception testing, and examining documents to identify differences between various transactions.
Mr. MacKenzie has prepared numerous reports detailing
1. The misappropriation of funds
2. Fraudulent tax returns
3. Miscategorization of expenses
4. Phantom employees
5. Related party transactions resulting in shareholder loss
Mr. MacKenzie’s experience and reputation as a highly competent, objective and authoritative financial expert make him an excellent choice to assist you in any matter. Additionally he has reviewed, analyzed and offered rebuttal testimony concerning forensic accounting reports prepared by others.
Mr. MacKenzie has prepared numerous reports for shareholders or the nonowner spouse detailing the misappropriation of assets. In particular he is assisted numerous attorneys in determining the true income of an individual. When an individual reports on his tax return, unfortunately, is not what he truly earns and may not be an appropriate base for determining alimony or child support.
The latest pronouncement from the Internal Revenue Service, and supported by the U.S. Securities and Exchange Commission, is Section 409A. Section 409A is a new section of the Internal Revenue Code that deals specifically with nonqualified deferred compensation plans, more importantly stock options. It was created as part of the American Jobs Creation Act of 2004, which was passed by Congress and signed into law in October 2004. It attempts to address an area of concern for the IRS, specifically taxation of option value grants.
One of the most effective ways closely-held companies in their infancy were able to compete with larger more established companies for talent was to offer substantial option awards at prices which were below fair market value, also known as cheap stock. Issuing such options is no longer an available alternative, due to the severe tax consequences applicable under the code section.
While all companies must comply with the new rules, there are methods available to insulate the company, and therefore the individual receiving the option from financial penalties. This means the company must create a rebutable presumption of reasonableness; by the application of a generally accepted valuation method. If this standard is met, then the stock options will be exempt from the financial penalties prescribed by the new regulations. But what exactly does the IRS consider an acceptable valuation method? Section 409A provides three solutions, which are referred to as “safe harbor” methods:
1. Illiquid Start-Up - the use of an individual (presumably an insider) who will determine a value and the CEO must state there are no liquidity events within the next year.
2. Binding Formula – a formulaic approach to value which must be used consistently in all transactions involving company stock.
3. Independent Appraisal - a valuation performed by a qualified independent appraiser using traditional appraisal methodologies within 12 months of grant.
Most companies appear to be selecting the independent appraiser approach. Engaging an appraiser with the proper qualifications is undeniably important. A professional designation, experience and ethics should be significant considerations in the decision making process – so before investing in an independent appraisal – qualify the appraiser and document the results.
Mr. MacKenzie’s experience and reputation as a highly competent, objective and valuation expert make him an excellent choice to assist you in the respective matter. As the Principal in charge of the New England Market Circle Valuation Practice for a global accounting firm, he was responsible for overseeing all valuation engagements for audit clients.
Option Pricing Model - Back Solve ("OPM)
This approach allows for the allocation of a company’s equity value among the various equity capital owners (preferred and common shareholders). The OPM uses the preferred shareholders’ liquidation preferences, participation rights, dividend policy, and conversion rights to determine how proceeds from a liquidity event shall be distributed among the various ownership classes at a future date. Per the AICPA guidelines:
“The option pricing method treats common stock and preferred stock as call options on the enterprise’s value, with exercise prices based on the liquidation preference of the preferred stock. Under this method, the common stock has value only if the funds available for distribution to shareholders exceed the value of the liquidation preference at the time of a liquidity event (for example, merger or sale), assuming the enterprise has funds available to make a liquidation preference meaningful and collectible by the shareholders…Thus, common stock is considered to be a call option with a claim on the enterprise at an exercise price equal to the remaining value immediately after the preferred stock is liquidated…the common implicitly considers the effect of the liquidation preference as of the future liquidation date, not as of the valuation date.”
AICPA 2013, Valuation of Privately-Held-Company Equity Securities Issued as Compensation Guide
A business valuation is a critical component of the estate tax return filing. Understanding the assets in the estate and assigning a proper value is critical.
Mr. MacKenzie is an experienced appraiser who has prepared valuations for federal and state estate tax purposes and has defended his work in court – few appraisers have as much trial experience as Mr. MacKenzie.
Gifting is an important part of any estate plans. As one generation transfers their wealth by gifting business interests a business valuation is needed to determine the number of shares or units that can be transferred while minimizing the tax. Undervaluing an asset can result in unintended tax consequences, while overvaluing the asset can delay the transfer of wealth and leave assets in the owners estate creating potentially an unnecessary tax obligation.
The Financial Accounting Standards Board (FASB) requires a company to conduct a purchase price allocation each time it acquires a company. Guidance can be found under ASC topic 805.
While the professional guidance may have changed, in theory the process is still the same allocating the purchase price over the assets and liabilities that have been acquired by the company. Mr. McKenzie has reviewed and prepared hundreds of purchase Price allocation engagements. If you have any questions or would like to speak to him about impairment testing or other financial reporting valuation issues please feel free to call 617-292-9201
If you’re looking for a way to win your divorce or financial case, you may sometimes need a damages expert witness to help convince the court of the difficulties you have suffered. Fortunately, MacKenzie & Company LLC in Boston, MA, can help you with your case, including performing as the expert witness you need to help your case succeed.
What Is an Expert Witness?
Sometimes your own statement of what happened isn’t able to stand on its own, particularly in difficult or expensive cases.
An expert witness uses their expertise in a particular field to share factual, unbiased information with the court. Because some information may not be commonly known to the individuals involved in court proceedings, an expert witness can help the court understand more complicated issues.
Damages expert witnesses can help explain to the court how a particular situation affected you. This can help you win your case and make sure that you receive a fair settlement for your case that fully covers any damages you have experienced.
Expert witnesses can also assist your case without testifying in court. They can also prepare legal documents with their expertise in the area. They can review important documents, interpret data, or other tasks to help win your case with facts.
Mr. MacKenzie has qualified as an expert witness for divorces, solvency analysis, financial statement reporting, gift and estate tax filings. With help from MacKenzie & Company LLC, you will be able to more easily convince the court of the damages you have experienced.
How Do I Get Help?
Don’t be afraid to take on a tricky case in Boston, MA, when you can have a damages expert witness and the help of MacKenzie & Company LLC at your side. Call us at 617-292-9201 to get on the path to peace of mind today.