Gift, Estate, & Income Tax Compliance

February 1, 2020

Mercer Capital’s Value Matters® 2020-02

Corporate Valuation and Estate Planning

COVID-19 and the Value  of Your Business

An Estate Planning Opportunity Due to Lower Valuations

What do Black Monday, October 19, 1987, and the COVID-19 Crash of March 2020 have in common?  

Black Monday was an event of uncertain cause, but the Dow Jones Industrial Average (“DJIA”) dropped 508 points, or 22.6% on that one day in 1987.  It was the largest single-day drop in history.  In less than two years, however, the massive losses of Black Monday were recovered in the markets.  

The COVID-19 Crash is a very recent event of certain cause. In mid-February 2020, the DJIA was flirting with the 30,000 level.  Since February 20, 2020, when the Dow was at 29,220, the Index has dropped to 18,591 (close on March 23rd), or a drop of 36.4% – a larger percentage drop than Black Monday.  In the days that followed, the Dow rebounded upon news of the fiscal package to combat the economic impact of COVID-19. As we move through uncertain days, it’s difficult to envision a recovery, but we are convinced that our economy and our people will recover.  

Black Monday provided a significant opportunity for intrafamily ownership transfers. Why? Because with the substantial drop in public market values, there was an accompanying drop in private company values.  

The COVID-19 Crash is severe. The triggering uncertainties are impacting all of us. The values of our client businesses are, at least for a time, lower than they were just a few short weeks ago. 

As business owners and other business leaders continue to make hard decisions in real-time against the ever-changing backdrop of the coronavirus pandemic, their legal and tax advisors would do well to consider whether this is an opportune time for ownership transfers. For many businesses, the current economic uncertainty presents a unique, and perhaps fleeting, opportunity for more tax-efficient estate planning.

Wall Street vs. Main Street

Investors value the shares of public companies on a (nearly) continuous basis. It should not be too surprising that these “real-time” valuations are subject to a good bit of volatility.  

Is the value of your business that volatile? Unlike public companies, private businesses are not subject to continuous public valuation. Reliable valuation data points for businesses exist only when a competent business valuation is prepared or when there is an arm’s-length transaction with a third party.  As a result, whatever day-to-day volatility exists in the value of private businesses is not visible. However, just because you can’t see it doesn’t mean it’s not there.  Instead, what is often assumed to be limited volatility in the value of a private business is more likely a function of the limited frequency with which value is observed.

The same fundamental factors that influence public stock prices – risk assessments, growth expectations, and cash f low projections – also influence the value of all private businesses.

We say all that to say this: unless you are a grocer or the like, the value of your business is likely lower today than it was two months ago, and maybe a good bit lower.

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October 2026 | When a Large Ownership Block Doesn’t Mean Control
Value Matters® October 2026

When a Large Ownership Block Doesn’t Mean Control | Valuation Lessons from Grieve v. Commissioner

A large ownership interest does not necessarily convey control, a distinction with important implications for gift and estate tax valuations. In Grieve v. Commissioner, T.C. Memo. 2020-28, the U.S. Tax Court accepted discounts for lack of control and lack of marketability on ownership interests representing 99.8% of the economic interests in two family-owned LLCs.
Thomas C. Insalaco to Speak at Tampa Bay Estate Planning Council
Thomas C. Insalaco to Speak at Tampa Bay Estate Planning Council
Thomas C. Insalaco, CFA, ASA, Senior Vice President at Mercer Capital, will speak at the Tampa Bay Estate Planning Council on Wednesday, October 21, 2026, at the Chester H. Ferguson Law Center in Tampa, Florida.His presentation, “Navigating Business Valuations: What Estate Planners Need to Know,” will examine common estate planning valuation issues that have recently received IRS scrutiny and offer practical guidance for avoiding potential problems.The Tampa Bay Estate Planning Council brings together attorneys, fiduciaries, accountants, investment advisors, charitable giving specialists, family office executives, insurance professionals, and valuation experts. The Council promotes collaboration among the disciplines involved in estate planning and provides educational opportunities for its members. As a Council Partner, Mercer Capital is proud to support the organization’s educational programming and commitment to collaborative planning.Tom Insalaco is a Senior Vice President and a member of Mercer Capital’s Gift, Estate, and Income Tax Planning and Compliance practice group. Since 2008, he has provided valuation services across a broad range of industries and matters, including gift and estate tax, business succession and exit planning, and buy-sell agreements.Mercer Capital regularly works with attorneys, fiduciaries, business owners, and other professional advisors on valuation matters involving gift and estate tax planning, business succession, ownership transitions, and buy-sell agreements.For additional information or to register, visit the Tampa Bay Estate Planning Council’s website.
Mercer Capital to Sponsor ACTEC’s 2026 Fall Meeting
Mercer Capital to Sponsor ACTEC’s 2026 Fall Meeting
Mercer Capital is pleased to sponsor the American College of Trust and Estate Counsel’s 2026 Fall Meeting, taking place October 15 through 18, 2026, at the Hyatt Regency Denver in Denver, Colorado. Bryce Erickson, ASA, MRICS, J. David Smith, CFA, ASA, and Sujan Rajbhandary, CFA, ABV, will attend on behalf of the firm.ACTEC’s national meetings bring together leading trust and estate lawyers, law professors, and other professionals for education, committee sessions, and peer discussion. This year’s professional program will address the prudent investment of unique and unusual assets; estate and business planning for farms, ranches, and oil and gas interests; publicity rights; digital assets; art collections; and assets held in regulated businesses.Bryce Erickson, ASA, MRICS, is a Managing Director and member of Mercer Capital’s board of directors. Since 1998, he has led approximately one thousand valuation engagements and has deep experience in gift, estate, and federal tax matters, litigation support, transactions, and business planning across a broad range of industries. Bryce leads Mercer Capital’s energy industry practice and is a regular contributor to Mercer Capital’s Energy Valuations Insights blog.J. David Smith, CFA, ASA, is a Senior Vice President at Mercer Capital and a senior member of the firm’s tax practice. He provides valuation services for tax planning, transactional purposes, and financial reporting, with particular experience in industries including financial services, oil and gas, and biotechnology. David is also a regular contributor to Mercer Capital’s Value Matters Newsletter.Sujan Rajbhandary, CFA, ABV, is a Senior Vice President and a member of Mercer Capital’s Gift, Estate & Income Tax Valuation Group. During his 20-year career at Mercer Capital, he has provided valuation and financial advisory services for tax planning and compliance, transactions, ownership transitions, and other corporate and shareholder matters. He is a regular contributor to Mercer Capital’s Value Matters Newsletter.Mercer Capital regularly works with attorneys, fiduciaries, business owners, and professional advisors on valuation matters involving gift and estate tax planning, trusts, ownership transitions, transactions, and disputes. The firm is proud to support ACTEC’s commitment to professional education and excellence in trust and estate law.Mercer Capital looks forward to reconnecting with friends and meeting new colleagues in Denver. For more information about the 2026 Fall Meeting, visit ACTEC’s event website.

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