Skip to main content

Using ValuSource Pro to carry out valuations for ROBS strategies. Featuring Samuel Phelps

Completing 500 Business Valuations in Less than 8 months

In this case study, we explore how Samuel Phelps has helped his clients maximize their retirement savings with Rollovers for Business Startups (ROBS) which require an annual valuation to remain compliant with ongoing IRS reporting requirements. This means that Sam’s team must have an efficient process to be able to have the capacity to carry out annual valuations for each of their clients. By automating the valuation process using ValuSource valuation software, Sam and his team can boost their productivity without compromising on quality.

The Company

TFG Valuation Services (TFGVS), a sister company to Tenet Financial Group (TFG), provides valuations for privately held companies that were funded through the Rollovers as Business Start-Ups or ROBS 401(k) plans. TFG is an industry-leading financial consulting firm and Third-Party Administrator that offers ROBS funding and ongoing administration to its client base. From franchising to recapitalization, their veteran advisors help business owners fund their venture quickly and securely, so they can focus on growing their business and their nest egg.

Valuations for ROBS

ROBS 401(k) plans offer an alternative option to generating retirement wealth. “People are looking to ROBS programs to generate wealth because regular retirement planning options like 401(k)’s are reliant on the market and the people managing their money,” says Sam. “They also offer a legal and tax compliant method to access retirement funds to finance a new or existing business.”

“A ROBS strategy must follow specific stipulations to remain IRS compliant and this is where TFG’s expertise comes in,” says Sam. “First, we help the clients set up a legal C-Corporation entity which is the destination of where their retirement funds will be invested. Next, TFG’s administrative team helps our clients in the process of setting up a new 401(k) Profit-Sharing-Plan (PSP) with their brokerage firm and assists every step of the way to help move their retirement funds from their existing retirement plan to the new plan, and finally into their C-Corporation. This takes a keen understanding of IRS regulations and the tax code to facilitate it all smoothly.”

As a legitimate 401(k) PSP, the IRS guidelines require the plan to have a fair market value at inception and annually as part of the plan’s filings. Thus, the need for valuing the shares of the privately held C-Corporation, in which the 401(k) PSP plan is invested, is born. Collaborating with a knowledgeable Third-Party Administrator and tax professional is always recommended to ensure your strategy and company remain compliant with IRS requirements for your ROBS plan. But it’s nevertheless, an opportunity to take control of your retirement funds and invest in your company.

The Scope
Automating 500+ ROBS Valuations per year

“We specialize in valuations for ROBS programs which require an annual valuation in order to remain compliant which means our clients come back to us yearly with updated financial information supplied by their accountant,” says Sam. “Since we conduct such a large number of valuations yearly, our workload is significant. Without valuation software, there would be no way to keep up with our workload and scale our practice without sacrificing the integrity of the report.”

“Most of the businesses we value range from small Main Street businesses to some that have $10 to $15 million in annual revenues,” says Sam “Additionally, a lot of the companies we work with are franchises, which is popular for a lot of clients as the franchise model offers a right out of the box proven business model that is appealing, as it helps mitigate a lot of the risk that is associated with new businesses.  Since our ethos is to offer their clients consulting services rather than being sales-driven, we also assist with exit strategies and often speak with clients to devise a plan to guide them toward achieving strategic objectives in a specific time frame.”

The Problem
A ROBS strategy must follow specific stipulations to remain compliant with the IRS. One of the requirements is an annual business valuation, so a valuation must be performed to establish a share value of the privately held company in which the ROBS 401(k) PSP plan is invested.  Once Sam receives the financials and other details from the business, he must then perform the valuation according to business valuation best practices.

Since there are so many valuations to perform annually, and with the number growing every year, Sam faced a huge logistical and resource hurdle. With a small staff and a limited amount of time, how could he complete 500 valuations that would provide fair market share values that are IRS-compliant and cost-effective?

The Solution
Using Business Valuation Software – Power of Templates

When Sam came across ValuSource valuation software he realized he now had the capabilities to automate the valuation process and quickly produce high-quality valuations. By creating two custom report templates, one for the ongoing annual valuation and one for the initial capitalization report, Sam can do more valuations in less time.

“The initial outlay of time was to get the report template setup to a manner that satisfied share value reporting for the ROBS 401(k) plans and fine-tuning for our engagements,” says Sam. “Once we had the templates set up in the software, we were efficiently completing the valuations. ValuSource allowed us to concentrate more on the specific client, company, and industry nuances without having to worry about quality, accuracy, or the risk of mistakes. The software takes care of everything, every change ripples through and the result is a complete, transparent, and a professional valuation.”

The Results

“We have already completed around 500 valuations this year and it’s only August,” says Sam. “The software takes a step-by-step approach and is fully transparent so I can see and have intelligent conversations over every aspect of the valuation with our clients.”

“We supply our clients with a valuation that is easy to understand without sacrificing the integrity of valuation best practices. Each report details the methods and approaches used clearly and concisely,” says Sam. “The capitalization report itself is briefer, usually around 30 pages, and requires minimal customization ‘out of the box’.”

Before finding ValuSource software, Sam was outsourcing valuations which were not only expensive to their clients but also meant he was at the mercy of the valuators he was outsourcing to in terms of both speed and quality. Since they were using their own spreadsheets to perform the valuations, valuation review and quality control were next to impossible because each valuator was using their own proprietary methods. Outsourcing these valuators also took far too long, the reports they generated were hard to understand because they were full of superfluous information and not targeted to our specific needs.


In conclusion, ValuSource’s business valuation software enables Sam and TFG Valuation Services the ability to provide an exceptional level of service by offering annual valuation services for Tenet Financial Group’s privately held companies funded through the 401k ROBS program. Sam and his team can offer a high-quality report that is clear, consistent, and easy to understand, and they never have to worry about errors.

About Samuel Phelps

Sam Phelps is the Director of Valuation Services for TFG Valuation Services and Director of Development for Tenet Financial Group. In his roles, Sam is active in working with the sales, lending, and valuation teams between the two companies. With over a decade of experience in commercial and SBA lending, Sam has developed an exceptional understanding of the small business industry and has a strong track record of advocating for his clients, utilizing his expertise to structure and implement practical financial options.

Sam’s educational background includes a degree in Economics and Finance from the University of Missouri and a Master of Finance from Georgetown University, where he also served as a teaching assistant at Georgetown and traveled to South Africa to assist a company in improving its credit structure.

Sam is actively involved in small business forums, and most recently served on the board of the North Texas Association of Government Guaranteed Lenders and the Risk Management Association of North Texas, as well as he continues to serve in current roles as a member of the credit committee of People Fund CDC in Austin, TX and the National Association of Government Guaranteed Lenders Region VI committee. Sam resides in Dallas Fort Worth with his wife, Lauren, where they enjoy attending the theater, exploring new areas in their travels, and supporting their Missouri Tigers.

#  #  #