Every valuation engagement is unique and dependent upon a wide range of considerations, observations, and assumptions. One business can have multiple valuation conclusions based on the purpose at hand, intended user, date of the valuation, state of the economy, revenue/earnings stream considered, and normalizing adjustments utilized in presenting financials to name a few. The following article highlights the most common issues associated with divorce valuations. Read more
Valuations are often required when a privately held business is part of a marital estate. In order to perform a division of property the parties must know the value of the asset, and in the absence of a public market price a third party valuation is required.
For the purposes of business valuation for divorce, we first look at standards of value. A quick definition: standard of value is defined in the International Glossary of Business Valuations as:
“the identification of the type of value being utilized in a specific engagement.” Read more
Estimating a value of intangible assets such as goodwill can be highly speculative. This is often a significant point of contention in scenarios involving two parties rallying for a fair market value of a business. We see it all the time in divorce proceedings. Read more
Regardless of your profession, we have a few common denominators: the (loathed) Patriots will be playing football, the Ground Hog will be wrong, and a goodly number of our clients will be getting divorced.
That’s right- family law practitioners know this well, and the statistics bear it out- the end of January is officially divorce season.
With that in mind, what better time to cover some basics on valuation matters related to divorce? Read more
One of the key components of valuing a business involves normalizing (adjusting) financials to reflect the earnings associated with the operations of the business. This oftentimes entails removing fringe benefits and perks as well as adjusting for a normalized Shareholder salary that would be required for an owner/manager to perform the tasks of said Shareholder.
Double dipping within a valuation utilized for divorce proceedings is the concept in which the same income stream is counted twice; first in the property division, and again in the alimony determination. A company’s earnings stream is most often used to value an owner’s interest, and in turn, determine the equitable distribution of property. The Shareholder’s alimony obligation will be based, in part, on their income received from the business. If the company’s profits are considered as part of the owner’s total income for support purposes, then that income utilized to value the business for the property division is being used a second time. Read more
What exactly is “personal goodwill,” how do you measure it, and is it transferrable to another party in the event of a sale? Valuation professionals are oftentimes engaged to determine exactly that. This analysis is integral in regards to tax implications and equitable distributions within a divorce, among many other purposes.
There are numerous tangible and intangible aspects directly tied to the success of a business as well as its competitive position within the market. By definition, goodwill is best stated as the portion of a business’ value above and beyond the market rate of its net tangible assets such as furniture, fixtures, and equipment. Personal goodwill, then, is the portion of goodwill that is attached directly to a person in the business (for our purposes most often a shareholder). Read more
Quantive is a verteran owned and operated financial services firm. We work exclusively on matters related to corporate value: business valuation, value growth, and M&A advisory.
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