Case law matters. Check out these three divorce decisions, recently added to BVLaw, which arose in different states and which all dealt with the question of whether it was appropriate to discount the owner-spouse’s interest in a closely held business. The different state courts arrived at different answers. But there is one common theme: Trial courts have great discretion in deciding whether to apply discounts and are often more guided by a notion of equity than valuation principles.

Telfer v. Telfer, 2018 Tenn. App. LEXIS 120 (March 5, 2018) 
The Tennessee Court of Appeals finds that the trial court did not err when it applied a marketability discount in valuing the partial interests in businesses representing the wife’s separate property; the use of DLOM is within the trial court’s discretion and depends on the facts of the case, the appeals court says.

Tate v. Tate, 2018 Ohio App. LEXIS 1340 (March 29, 2018) 
The Ohio Court of Appeals upholds the valuation of a minority interest in farm entities based on the fair value standard of value. The court notes the prevailing expert specifically referenced buy-sell agreements that did not contemplate the use of discounts in valuing an exiting member’s partial interest.

Cobane v. Cobane, 2018 Ky. App. LEXIS 107 (March 23, 2018)
The Kentucky Court of Appeals says that, in valuing the owner-spouse’s minority interest in an LLC, the trial court “would have been well within its discretion to apply a minority discount”; however, it was not error for the trial court to reject a discount based on certain questionable actions related to the owner’s interest.