What'll it be? The income approach, said the court in valuing NY deli in 'Ruggiero

Ruggiero v. Ruggiero, 2013 N.Y. Misc. LEXIS 3698 (July 29, 2013)

When a family dispute over the value of and rights to a New York kosher deli resulted in a stalemate, the court brought in valuation experts to determine the fair value of the business. Both appraisers rejected the "traditional" market approach, claiming they could not find comparables. (Pratt's Stats, anyone?) Instead, the plaintiff's appraiser devised a version of the market approach, applying a 40% price to revenue multiple based on "his experience in the business valuation field." The income approach was unsuitable, he said, because of the restaurant's deficient records  for income, expenses, and accounts receivable and payable.
But the allegedly shoddy record keeping did not prevent the defendants' expert from determining the company's income and offering a valuation the court found more accurate. There was no reason to believe the plaintiff's expert had insufficient information, the court said. Moreover, he failed to provide a convincing explanation for the 40% multiple.
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