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Must a non-profit use a valuation to set a purchase price of…

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Must a non-profit use...

Must a non-profit use a valuation to set a purchase price of a for-profit

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What place does a valuation hold in a non-profit purchase of a for-profit?

Submitted: 4 months ago.Category: Finance
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Answered in 3 days by:
3/25/2018
Financial Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 4 months ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 1,186
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Financial Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 4 months ago

Dear Customer,

All organizations have values. Non profit organizations have their values even if they are not profit seeking. It still has fund balance value.

In general, organizations are valued by assets they hold, the revenue it can bring in, and comparable worth of similar organizations which have been sold in the market.

There are actual appraiser provide services to valuate non profit organizations.

If you are considering to purchase a non-profit organization, it is suggested that the decision needs to be done as a "business" decision with value that fit your organization's needs.

The purchase decision and amount paid and entity purchased are most important in non-profit organization. We have to show to our Board, donor, and tax authorities that the decision is done rationally with fare and reasonable price paid. We don't own our entity, the people who put up the donations and money own it and we need to be extra cautious to show that we hold on to the fiduciary duty due to them.

Please feel free to follow up.

Regards,

Fiona

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