In a Vermont divorce case, the valuation expert for the husband valued his business by excluding proceeds from a Paycheck Protection Program (PPP) loan as a one-time windfall for purposes of a capitalized cash flow (CCF) analysis. The wife’s valuation expert also did a CCF analysis but included the loan proceeds in the cash flows, which resulted in a higher valuation.
Current practice? The wife’s expert told the court that, currently, valuation professionals tend to leave PPP income in cash flows because the intent of the PPP program was to replace lost income and encourage employers to keep employees on the payroll. The husband’s expert noted that “reasonable experts could differ” on the matter.
The court found the wife’s expert’s testimony more convincing and adopted that expert’s higher valuation, and the state’s Supreme Court affirmed.
The case is Griggs v. Griggs, 2023 Vt. Unpub. LEXIS 18; 2023 WL 2473542, and a case analysis and full court opinion are on the BVLaw platform.