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The Internal Revenue Service (“IRS”) issued a Revenue Ruling in 1959 that to this day serves as the benchmark guide for valuation professionals to follow in their work. The revenue ruling was the 60^th revenue ruling made in 1959. Thus, the ruling became known as Revenue Ruling 59-60.

The elements we examine during valuations adhere to the tenets outlined in IRS Revenue Ruling 59-60. This landmark ruling recommends that the following factors be examined in conducting a closely held business valuation:

• The nature of the business and the history of the enterprise from its inception;
• The economic outlook in general and the condition and outlook of the specific industry in particular;
• The book value of the stock and the financial condition of the business;
• The earning capacity of the company;
• The dividend-paying capacity of the company;
• Whether or not the enterprise has goodwill or other intangible value;
• Prior sales of the stock and the size of the block of stock to be valued; and
• The market price of stocks of corporations engaged in the same or a similar line of business having their stocks actively traded on an exchange or over-the-counter market.

It is amazing that this benchmark ruling is just as relevant today as it was in 1959. It also provides a great framework for business owners to evaluate the overall health of your business enterprise. Van Amburgh Valuation Associates Inc. stands ready to help you in this evaluation. Please call 972-723-9500 (Texas) or 919-964-8423 (North Carolina) if we can help.