Litigation Support & Business Ownership...

The challenge of a business valuation expert is to provide, what can often be complex and detailed, information in a cogent manner within a brief period of time.? The characteristics of closely-held corporations, including the lack of a ready market for the stock, make the task of valuation a particular challenge to the lawyer”.? When an appraisal is needed ?Most statutes are general; therefore, judicial precedent may be a determinative factor in what methods to value are used and are governed by the individual state. Most businesses possess Goodwill, which is beyond the value of other tangible assets owned.? This is why a business appraisal expert should be retained to value an intangible that is often difficult to measure.? Black’s Law Dictionary (5th Ed.) defines intangible assets as:? “Such values as .” In California, which has some of the highest number of lawsuits and divorces in the country, the Golden v. Golden (CA 1969) case established the rule that, even if the enterprise is a sole practitioner practice, the value of goodwill should be considered.? This is because the property is argued to go automatically to the licensed spouse and that (s)he is not actually selling or liquidating, but continuing business.? The non-operating spouse of this community property is seen as effectually withdrawing and may be entitled to fair compensation for the interest owned.? This implies that goodwill must be transferable to have value.? Since the spouse is simply transferring the one-half community interest, it may have greater value as the other interest holder has an already established relationship with customers.? This may be referred to as “compulsion value” or the unique circumstances surrounding the valuation and distribution of business interests in a dissolution.? It is vital to contact an expert before opposing counsel retains one that is in high demand; therefore, having an expert business appraiser file on hand is highly recommended.? Be sure no conflict of interest exists.? Also, inquire about the percentage the expert has represented the owner versus the non-operating spouse.? A cursory evaluation can be performed in typically five hours in many circumstances, with the fee applied to a more thorough engagement, if determined to be worthwhile.? This usually involves providing the expert with copies of relevant documents, such as a sufficient number of years of financial statements and tax returns; lease, employment and partnership agreements; brief business history; articles of incorporation; interest to be valued and other operational materials. * Continue Reading...