Our firm is often retained by individuals and family law attorneys throughout the United States to assist in dissolution of marriage cases in which one or both spouses own a business that needs to be divided fairly.
If you are going through a divorce and live in a state where the family business is considered a marital asset, it is in your best interest to know the fair value of that business. Whether you are without council or working with an attorney preparing for mediation or trial, we can provide the supporting reports and consulting to make sure you are treated fairly.
Divorce business valuations are among the most complex and contentious. Ultimately a local judge could decide if the valuation is fair and accurate for it to be considered. We will work closely with your legal team to make sure our valuation conclusions and reports are tailored for your local jurisdiction and specific circumstances.
In addition, to best position our valuations for a successful, equitable outcome for both sides, we adhere to the following principles:
Our business valuations are 100% in compliance with the Institute of Business Appraisers professional Standards for Valuation Services and IRS Revenue Ruling 59-60, both recognized standards.
We always strive for a fair outcome for both sides. We will not skew our opinion to one side or the other and take great pains to ensure that our findings are acceptable for everyone involved; this can save both sides a considerable amount of money!
The majority of American jurisdictions hold that personal goodwill of a business cannot be classified as a marital asset. To that end, our business valuations quantify and separate the personal (or professional) goodwill component from the business (or enterprise) goodwill component. In fact, in our detailed reports, we offer the courts multiple valuations if necessary. For example, if the couple's separation date, filing date, and court date differ by more than three months, we provide a matrix of conclusions of value indexed by each critical date. What's more, our conclusion matrix shows values with and without Minority Interest Discounts and Personal Goodwill carve-outs. This gives the judge the tools to rule based on all the facts and local interpretations.
In many divorce cases if the out-spouse seeks alimony in addition to a portion of the business interest for asset division purposes, inequities may be created when considering the value of the business vis-a-vis alimony payments. The idea is based on the premise that the current value of the business is the present value of future benefit streams (“income”) generated by that business, i.e., a future income is converted into an asset. Therefore, to use 100% of the income derived from the business to calculate alimony payments would be double-counting. In other words, the value of the business (“Asset B”) is calculated using specific income; if the exact same income is used again to calculate another asset (alimony payments or “Asset A”), then the business income has been used twice, i.e., in the derivation of “Asset A” and “Asset B.” Once the income has been used to derive the value in “Asset B” it should not be used to derive value in any other asset unless there is a distinction between the income used to derive business value and the income used to derive alimony payments. In order to avoid using the same business income twice, the business income should be bifurcated into two components- income used to derive alimony payments and income used to derive the value of the business. The execption is when the income or market approaches are not used to accord value. That is, if the Asset Approach is used since that approach does not use income to derive value, there would be no chance of “double-dipping.”
WHY Start with a FREE Consultation?
1. Let's determine the scope of the business valuation you need. This could impact the cost significantly.
2. Getting solid, FREE advice upfront from an expert will save you thousands of dollars!
3. We can estimate a ball-park value over the phone to see if it makes sense to proceed.
4. We will address the circumstances around the valuation to ensure you are on the right path.