Valuing an interest in a publicly traded company is relatively easy. Closely held businesses are another matter because there is no market history to gauge value. It becomes necessary to use experts to locate comparable sales, value business assets or capitalize income.
This process is quite variable depending on the judgments made. Value can be dramatically increased or decreased due to different choices of discount rates, tax assumptions or risk factors. Valuation reports can differ by millions of dollars depending on the assumptions made the the experts. You will need an attorney conversant with these techniques as well as the experts who do this type of work.
The valuation process has become considerably more complicated since the Great Recession challenged some long held financial assumptions. Because all valuations are based on expectations of the future, it is critical to understand how the disrupted business climate may affect a particular enterprise. Awareness of the rapidly changing business climate is crucial to accurate business valuation.
If you or your spouse is an entrepreneur who has created a thriving business or professional practice, you need a law firm that understands the nuts and bolts of the valuation process so that both parties are treated fairly.
Attorneys in our firm have handled cases involving very complex business valuations and have taught a number of seminars for attorneys and accountants on business valuation issues.