In an Illinois divorce case, different fundamental assumptions about the husband’s picture frame business yielded greatly disparate values from the two experts. Is the picture frame industry mature or is it booming? Of course, this basic assumption fuels the entire valuation, and it depends on how you look at it.

Two views: The wife’s expert assumed the business would experience “significant growth” based on “broad industry outlooks predicted for the retail sector, wholesale sector and home furnishing and wholesaling industry.” On that basis, the expert valued the business at $61 million. But the husband’s expert testified that the picture frame business was a niche sector that was mature and would not grow along with the broader industry trends. Under that assumption, the expert came up with a $20 million value.

The trial court agreed with the husband’s expert that this was a niche, mature industry but rejected his other inputs to the valuation, including the year used for the capitalization, the growth rate, equity risk premium, estimated goodwill, and more. But the court also rejected certain inputs the wife’s expert used, including sales rate increases, growth rate, and failure to include personal goodwill.

In the end, the trial court’s valuation fell in the middle, at $42 million, which was affirmed on appeal.

The case is In re Rozdolsky, 2024 Ill. App. Unpub. LEXIS 311, and a case digest and full opinion are available on the BVLaw platform.