In last week’s BVWire we highlighted an active debate occurring on LinkedIn’s BV Professionals Group.  The issue is “who should know the legal definition for standard of value - the attorney or the appraiser?”

We received a number of comments, including this from Jim Alerding (Clifton Gunderson):

“The questions posed are very good ones for most practitioners.  Certainly I would confer with the attorney to determine what and whether they believe the standard of value to be.  In some cases attorneys have asked me for input on what the appropriate standard might be and the attorney makes the final call (as long as the valuation analyst feels it is a reasonable conclusion).  Divorce cases sometimes present different issues relating to standard of value.  In many cases there is no clear standard of value in a particular divorce jurisdiction and even the case law presents, usually impliedly, different standards in different cases in the same jurisdiction.  It has been my experience that in most such cases it is important for the valuation analyst to know the particulars of the case law to be applied to the particular case.  This means that it might not be defined in terms we are familiar with, such as "FMV."  For example, a jurisdiction might believe that 1) a sale of the business should not be assumed; 2) personal goodwill should be excluded; 3) but salable personal goodwill should be included; and a pass through entity should not be tax affected.  How do you define that in a standard?”