The purpose of valuing private firms varies. Although a valuation is generally required prior to a private firm being transacted, the majority of private firm valuations are completed for tax-related reasons. For example, equity in a private firm that is part of an estate needs to be valued in order to calculate the estate’s tax liability. Similarly, when ownership interests of a private firm are gifted or when they represent a charitable donation, their monetary value needs to be determined, and these valuations typically accompany the donor’s tax return. Hence, these valuations are subject to audit by the Internal Revenue Service (IRS).