Small business owners are often shareholders.
However, they rarely buy or sell their shares.
This is because they are inextricably linked to management rights.

Since they rarely buy or sell, it is crucial to understand how stock prices are calculated accurately, and you don’t get a simple market price.

This section will review the primary stock valuation method and then consider why it is difficult for small businesses to move their shares.

Basics of Stock Valuation

There are three main methods for valuing stock prices

Dividend Discount Valuation Method

The dividend discount valuation method is among the most common ways to evaluate a company’s stock price.

It calculates the value of a stock by reducing the dividends that the company expects to pay shareholders in the future to their present value. Specifically, future dividends are converted to current value using a specific discount rate, and the sum of the two is used to evaluate the share price.

Comparable Industry Method

The Comparable Industry Method evaluates the stock price of a target company based on the stock prices and financial indicators of other companies in the same industry and market. Ratios such as PER (Price price-earnings ratio) and PBR (Price-to-book ratio) among similar companies are used to calculate the relative value of the companies.

Net Asset Value Method

The Net Asset Value Method is one of the methods used to evaluate a company’s stock price. The stock price is calculated based on the company’s net assets (equity capital), the amount obtained by subtracting total liabilities from total assets. This method directly evaluates the actual value of a company, i.e., the value of assets held by the company.

The net asset value per share is calculated by taking the difference between total assets and total liabilities on the company’s balance sheet and dividing it by the number of shares outstanding.

A single value per share? Stocks that cannot be sold

Management might consider the price of the funds initially divided by the hypothetical number of shares. However, as mentioned above, the calculation will accurately reflect the stock’s market value at the time, not its par value.

The stock price may be higher than expected.
The trouble is that a higher price means higher taxes.
In this case, it could be a higher Gift Tax(Zouyozei[贈与税])or Inheritance Tax(Souzokuzei[相続税]).

When taxes are higher, you need cash.
However, it is difficult to sell the shares because you cannot give the small business management rights to someone else.
Passing it on to a relative may also be challenging.

Small business stock transfers should be planned.

As you can see, even small business stock may be subject to gift and estate taxes when you move.

So, moving or selling small business stock requires planning.
Based on proper valuation, the best timing and transfer method can be considered to maximize the company’s value.

Our firm also provides stock valuation services for small and medium-sized businesses.
Please see below for more information.

税務行政執行上の困難性から廃止された。 1958年(昭和33年)、現行法定相続分課税方式による相続都度遺産取得税方式に改正された。 2008年(平成20年)の税制改正で、中小企業(法人)向けに「事業承継税制」が創設。非上場株式等相続納税猶予特例(2008年10月以後相続

がなかった時代には、財産を生前贈与によって移転することで、容易に相続税課税の回避を行うことができた。特にイギリスでは1974年まで、贈与がなかったことから、世襲貴族などの資産家の富の承継が可能で、貧富の差の拡大を招いたといわれる。 日本では、相続税相続税

贈与税やアメリカ合衆国のGift Taxのように、贈与をした方に課税する方式も存在する。 贈与税の目的の1つが、生前贈与による相続回避の防止にあることから、相続の補完的なの性質を持つ。したがって、相続税法(昭和25年法律第73号)の中で相続とともに規定されている。 贈与税

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