The President/CEO of The Washington Valuation Group, Achille Ekeu, has been invited to speak about Business Valuation and Exit Planning at Washington Community Investment Fund (WACIF) during a workshop series titled: Getting More Bang For Your Business's Buck.


In this workshop, you will learn how to prepare an effective exit strategy for the sale of a business without leaving any money on the table. You will also understand the importance of completing a business valuation at least five to ten years before a planned exit.


  • Many business owners have no exit strategy in place and may not know how to create an exit strategy. We will show you how to create one.

  • Many business owners don't understand what business valuation is and why it's critical for their exit strategy. We will explain to you what it is.

  • Many business owners don't know how to ensure their business is ready for transfer when the moment comes. We will show you what to do.


After this webinar, you will be able to:

  • Explain the different reasons to exit a business

  • Describe the exit options available to them

  • Describe the steps they need to take to transfer their business

  • Explain why the valuation of their business is critical when planning to exit

Who Should Attend This Event?

Existing or prospective business owners interested in business valuation and exit strategies.

Date: Wednesday, September 29th, 2021

Time: 12:00 pm to 1:00 pm on Zoom

Registration: Register Here

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Updated: Aug 11

In the long-running litigation between the estate of the late megastar Michael Jackson and the Internal Revenue Service, the U.S. Tax Court finally issued its opinion on the value of Jackson’s name and likeness, as well as the value of his interest in two music publishing assets. Overall, this much-anticipated decision is a major win for the Jackson estate.

From the time he was a child Michael Jackson was famous, and there were times in his life, testified his executor, when he was the most famous person in the world. There were certainly years when he was the most well-known popular-music star, and even after his death, there have been years when he was the world's highest-earning entertainer.

But there were also many years when he was more famous for his unusual behavior and not his unusual talent. And there were some years where his fame was turned infamous by serious accusations of the most noisome acts. We make no particular judgment about what Jackson did or is alleged to have done, but we must decide how what he did and is alleged to have done affected the value of what he left behind.

His Estate and the Commissioner agreed on the value of many of his assets, but continue to dispute the values of three intangible ones:

  • Jackson's image and likeness;

  • his interest in New Horizon Trust II, through which he held an interest in Sony/ATV Music Publishing, LLC; and

  • his interest in New Horizon Trust III, which contained Mijac Music, a music-publishing catalog that owned the copyrights to compositions that Jackson wrote or co-wrote, as well as compositions by other songwriters.

Facts of the Case

After Jackson died the Estate hired the accounting firm Crowe Horwath to prepare its return. Their work began with a long list of labor-intensive chores, as Jackson's various assets needed to be inventoried, photographed, valued, and insured. The chores became more arduous when they discovered that Jackson's Tohme-led team of advisers had kept no contemporaneous books and records in the last three years of his life. Kane, Jackson's last business manager, worked as a liaison between the Estate and the Crowe Horwath team to prepare the return, and recommended appraisers to value Jackson's interests in Sony/ATV and Mijac, as well as his image and likeness.

The Estate retained Moss Adams, a large accounting and consulting firm, to value Jackson's image and likeness and his interest in Mijac. Relying entirely on the income approach to valuation, Moss Adams valued Jackson's image and likeness at $2,105 and Mijac at $70,860,000.

To value Jackson's ownership interest in Sony/ATV, the Estate selected the Salter Group, an independent financial and strategic advisory firm that specializes in valuations. The Salter Group also chose to use only the income method, which led it to value Jackson's ownership interest in Sony/ATV at $0.

Using these valuations, the Estate, on its 2009 Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, reported the value of:

  • Jackson's image and likeness at $2,105;

  • NHT II, which held Sony/ATV, at $0; and

  • NHT III, which held Mijac, at $2,207,351.

The Estate also reported Jackson's various other assets—the most significant among them including his Hayvenhurst home; MJJ Productions, Inc.; MJJ Ventures, Inc.; and his master recordings. Jackson was, when he died, the sole shareholder of MJJ Productions and MJJ Ventures. MJJ Productions collected Jackson's mechanical royalties as a recording artist under an agreement with Sony Music, Inc., while MJJ Ventures collected Jackson's share of joint venture income under an agreement with Sony for the exploitation of Jackson's master recordings.

The IRS Audit

The Commissioner audited the Estate's tax return and in May 2013 issued a notice of deficiency that adjusted the Estate's reported values. We summarize it here:

              Item                        Adjustment

  Hayvenhurst real estate                 $1,425,000

  MJJ Ventures, Inc.                      67,393,780

  Share of artist mechanical rights
  under Jackson 5 master recordings,
  and master recordings                   34,299,095

  Miscellaneous property                  48,603,827

  Image and likeness                     434,261,895

  New Horizon Trust II                   469,005,086

  New Horizon Trust III                   58,478,593

  Debts                                   12,252,591

  Limitations to Schs. J & K               (713,436)

   Total                               1,125,006,431

This adjusted valuation led the Commissioner to conclude that the Estate had underpaid Jackson's estate tax by a shade more than $500 million. The Commissioner also determined that some of the valuations were so far off that he tacked on penalties of nearly $200 million. The Estate timely petitioned. During the trial, neither the Commissioner nor the Estate entered any evidence into the record to show that the initial determination of these penalties was personally approved in writing by the immediate supervisor of the individual making the determination. The Commissioner moved after trial to reopen the record with new evidence to try to show that the initial determination of penalties was personally approved in writing by the immediate supervisor of the individual making the determination. The Court denied that motion.

The IRS's Valuation Expert's opinion of value are the following:

  • Jackson's image and likeness at $161 million;

  • NHT II, which held Sony/ATV, at $206 million; and

  • NHT III, which held Mijac, at $114 million.

In the end, here are the tax court's decisions:

     Asset            Estate          Commissioner      Tax Court

  Jackson's image
    and likeness     $3,078,000      $161,307,045      4,153,912

  NHT II               -0-            206,295,934        -0-

  NHT III            2,267,316        114,263,615     107,313,561

The adjusted audited value of Michael Jackson's estate is $275 million (rounded) as described below:

             Item                        Adjustment

  Hayvenhurst real estate                 $1,425,000

  MJJ Ventures, Inc.                      67,393,780

  Share of artist mechanical rights
  under Jackson 5 master recordings,
  and master recordings                   34,299,095

  Miscellaneous property                  48,603,827

  Image and likeness                       4,153,912

  New Horizon Trust II                        -0-

  New Horizon Trust III                  107,313,561

  Debts                                   12,252,591

  Limitations to Schs. J & K               (713,436)

   Total                                $274,728,330

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  • Achille Ekeu, MBA, CVA


Business valuation (BV) experts have standards they have to follow during a business valuation engagement. The three most important standards are: The General and Ethical Standard, the Development Standard, and the Reporting Standard. The Development Standard of the National Association of Certified Valuators and Analysts (NACVA) sets the steps that every valuation expert should take to derive a conclusion of value that is replicable and trustworthy. The Reporting Standard on the other hand, determines what goes into the report to meet the requirements of a given type of valuation except litigation. The General and Ethical standard sets the overall values that must guide every expert in the exercise of his/her profession. One of the key steps in the Development Standard is the site visit and management interview. Some BV experts delegate this important responsibility to either their staff or a different BV analyst in their firm and believe it or not, in another unrelated firm. Is this acceptable? Is this ethical? Is this professional? My answers are No, No, and No.

My Opinions on Site Visits

I have been a business valuation expert since 2012 after getting my CVA from NACVA. I have done many valuations since then and strive to make sure I always abide by NACVA standards, not because I am obligated, which I am, but because I love the structure it provides for my engagements. In my opinion, the most exciting part of the engagement is not getting the engagement letter signed, but the site visit and management interview. I believe that it is the most important aspect of an engagement. Having the opportunity to visit the business location and interact with the employees, the lower and higher levels of management, as well as checking out the various machines, tools, environmental and safety aspects of the business, and everything else that helps the business run effectively. What puzzles me is that some BV experts delegate that responsibility to others in their firms and worse, to others outside their firms, and they do not find it unethical.

Facts and Case Law

I was asked by a friend and fellow BV expert to do a site visit for him in a restaurant that is not too far from where I live. I was first bewildered by the request, I started stuttering and became nervous as I asked him again if what he was asking me was to do a site visit for him? He confirmed that it was exactly what he was asking me. I said, “absolutely not.” That is not possible for various reasons:

  1. It is his valuation engagement and he is paid to do his due diligence and not delegate this very critical task to anyone.

  2. I consider the site visit to be a critical part of the valuation engagement and, thus, should be handled with the utmost care as this is our opportunity to share with management our concerns and get clarification on a variety of issues that are found during the analysis of the company’s tax returns, financial statements, and other documents.

  3. It is natural to me to talk to business owners as a former banker who loves working with businesses to support their growth strategies. I always look forward to meeting the staff and management of a business but I understand why some experts may not be at ease interacting with them. Hence, the need to delegate their most important responsibility to a third party whether internal or external. Nonetheless, that may be unethical.

As I state in my book, 30 Frequently Asked Questions In Business Valuation (Ekeu, 2017), on page 52, Question 21:

“It is essential for the analyst to conduct a site visit because besides attesting to the physical existence of the business, the site visit also can enhance the understanding of such factors as the subject company’s operations, the efficiency of its plants, the condition of its equipment, the advantages and disadvantages of its location(s), the quality of its management, and its general and specific strengths and weaknesses.”

Shannon P. Pratt, when discussing the relative importance of site visits/management interviews in his book, Valuing Small Businesses and Professional Practices (Pratt, Reilly, and Schweihs, March 1, 1998) states:

“[F]or valuations subject to contrarian review (which most are), courts are becoming quite sensitive to the importance of site visits and management interviews. Many clients and attorneys dismiss or downplay the importance of a site visit and/or don’t want to incur the interruption or the cost of the analyst’s time for it. We prefer to make site visits and conduct management interviews. In our experience—as well as in many court cases—the site visit not only helps the analyst get a better perspective, it makes a difference in the analyst’s credibility in the eyes of the court.”

Dr. Pratt also addresses cases where the intended user of the report is unfamiliar with the business or has never seen the facilities in question. He indicates:

“If the analyst will need to communicate some description of the operations, facilities, or both to someone lacking the opportunity to visit the facilities, such as a judge in a court case, it may be desirable to take a set of pictures while on tour.”

It is widely accepted in the valuation profession that a site visit/management interview is a very important part of the valuation process, and is, in fact, imperative if an appraiser is to perform a complete analysis of the operations of the company being appraised.

To further understand how adequate due diligence is important, it is worth reading the Kohler v. Commissioner (2006), Tax Court case. There, the U.S. Tax Court criticized the IRS expert for limited due diligence related to site visits and short management interviews.

“we are convinced from his report and trial testimony that [the IRS expert] did not understand Kohler’s business. He spent only 2.5 hours meeting with management.”

Whereas the estate’s expert spent 3.5 days on a site meeting with employees and management. The Court stated that:

“[Estate’s experts] spent sufficient time with the company and management to understand the Kohler business.”

NACVA’s Standards

NACVA has standards that govern the site visits and management interviews.

The General and Ethical Standard stipulates that:

“A member shall perform professional services in compliance with the following principles: integrity and objectivity, professional competence, due professional care, understandings and communications with clients, planning and supervision, sufficient relevant data, confidentiality, acts discreditable, client interest, documentation, and financial interest.”

The Development and Reporting Standards in the “Scope Limitationssections, give the expert the opportunity to share any limitations of the scope of work they encounter during their engagement and document them in this section of their report. That includes the inability to perform a site visit and/or management interview that could be material in determining the value of the company.


I firmly believe that this responsibility is very important and requires the BV expert to be present during this step and not delegate it to someone who may not understand the full picture of the business operations. Furthermore, the management interview not only helps understand the history of the business, its compensation policy, its market, and marketing policies and plans, its labor relations, its regulatory relations, its supplier relations, its inventory policy, its insurance coverage, its reasons for deviating from industry or guideline company norms, and its off-balance-sheet assets and/or liabilities; it also allows the valuation expert to investigate:

  1. Management’s perspective on the company’s position in its industry;

  2. Any internal or external facts that could cause the future results to differ materially from past results;

  3. Prospects, if any, for the liquidity event (sale of the company, public offering of stocks, etc.);

  4. Why the capital structure is organized as it is, and any plans to change it;

  5. and more.

So, it is very clear to me that site visits are a critical aspect of a business valuation engagement that must not be delegated to anyone. The valuation expert must be present and accompanied by additional staff if necessary.

Works Cited

Ekeu, A. (2017). 30 Frequently Asked Questions In Business Valuation. Washington DC: The Washington Valuation Group.

Herbert V. Kohler, Jr., et Al., Petitioners v. Commissioner of Internal Revenue, Respondent, 4621- 03 (United States Tax Court July 25, 2006).

Pratt, S. P., Reilly, R., and Schweihs, R. (March 1, 1998). Valuing Small Businesses and Professional Practices. McGraw-Hill Education; 3rd Edition.

Achille Ekeu, MBA, CVA, is the President and CEO of The Washington Valuation Group, LLC who just arrived at the end of his three-year term serving on the Valuation Credentialing Board (VCB) of the National Association of Certified Valuators and Analysts (NACVA). He is currently the State Chapter President of NACVA for Maryland and Washington DC. Mr. Ekeu is the Author of a book titled “30 Frequently Asked Questions in Business Valuation”. He focuses on business valuations for tax, transaction, and litigation purposes. He was just recently appointed by Court Order on a big litigation case in Baltimore City, Maryland.

Mr. Ekeu can be contacted at (240) 274-9570 or by e-mail to

Note: This article was first published in the QuickRead Journal on June 24, 2021. QuickRead is a peer-reviewed professional journal of The National Association of Certified Valuators and Analysts (NACVA).

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