BV News and Trends December 2024
A monthly roundup of key developments of interest to business valuation experts.
Oakes v. Oakes David C. Oakes & Leadwise, Inc.
Once again, a court, in this case a state appellate court, questioned the efficacy of projections used to determine the value of a business using the income approach. The appellate court remanded the issue to determine whether a major assumption of the projections “failed.” Additionally, because of the size of the equalization payment, likely to be paid over a number of years, the appellate court ordered that the husband provide security for the equalization payment. This case highlighted the complexity of divorce proceedings involving high-value assets, the importance of credible valuations, and the need for appropriate safeguards in financial obligations.
Ohio Appellate Court Remands for Determination of Efficacy of Projections in Determining Value and Orders Security From Husband for Equalization Payment to Wife
Once again, a court, in this case a state appellate court, questioned the efficacy of projections used to determine the value of a business using the income approach. The appellate court remanded the issue to determine whether a major assumption of the projections “failed.” Additionally, because of the size of the equalization payment, likely to be paid over a number of years, the appellate court ordered that the husband provide security for the equalization payment. This case highlighted the complexity of divorce proceedings involving high-value assets, the importance of credible valuations, and the need for appropriate safeguards in financial obligations.
Business owner spouse stuck with agreed-upon valuation date
In a Pennsylvania divorce case, the wife was the 100% owner of a staffing business, but her husband ran it.
Need to Explain the Valuation of a Multilayered Entity? Try This Chart
At the recent two-day Forensic and Valuation Conference held by the Virginia Society of CPAs (VSCPA), there was a good presentation on related-party companies in divorce with valuation expert Karolina Calhoun (Mercer Capital) and attorney Kevin Segler (KoonsFuller), which included a very effective visual.
Explicate the “Personal” in Goodwill
Join experts Jim Alerding and Josh Shilts as they review personal versus entity goodwill issues and discuss the current state statutes, relevant case law, and examples. They will also review other personal versus entity goodwill issues, such as transferrable versus non-transferrable goodwill and methods of determining the breakdown of total goodwill into its components.
Kidan v. Schneider
The ultimate value determination in this case involved questions of the appropriate date of value, a question of whether to consider a transaction subsequent to the date of valuation, and a determination of the amount of personal goodwill.
Pennsylvania Appellate Court Affirms Trial Court Determination of Value of Wife’s 25% Interest in Staffing Business
The ultimate value determination in this case involved questions of the appropriate date of value, a question of whether to consider a transaction subsequent to the date of valuation, and a determination of the amount of personal goodwill.
Ripple effects of Florida’s updated law regarding goodwill
Regardless of whether you practice in Florida, a change in the law there—plus a recent court case—takes the analysis of enterprise versus personal goodwill in marital cases to another level.
Lunt v. Lunt
This divorce case provided a good analysis of personal versus enterprise goodwill and the elements that were included in each. It also discussed the history of personal and enterprise goodwill in Utah that progressively allowed the exclusion of personal goodwill from the marital estate in a divorce in Utah. The general principles of personal versus enterprise goodwill are applicable most everywhere.
Utah Appeals Court Affirms Trial Court Allocation of 5% of Value of Husband’s Website Business to Personal Goodwill
This divorce case provided a good analysis of personal versus enterprise goodwill and the elements that were included in each. It also discussed the history of personal and enterprise goodwill in Utah that progressively allowed the exclusion of personal goodwill from the marital estate in a divorce in Utah. The general principles of personal versus enterprise goodwill are applicable most everywhere.
Divorce Power Panel: Trends and Issues in Family Law
The divorce power panel provides insight into some of the hottest topics in family law. The panel consists of top financial experts and family law attorneys who will share their knowledge and expertise in a variety of areas. Among the topics are: current trends and hot topics on divorce financial issues; rules of the game when using a neutral expert; experts acting like lawyers—where do you draw the line?; trial tips and techniques; forensic accounting ...
Blount v. Blount
The appellant wife in this case argued that the trial court failed to divide the marital estate equitably because it did not make an explicit finding of fact as to the valuation of the business that it awarded solely to her but instead only made a finding as to the “excess cash” found in the business. The appellate court affirmed the trial court, explaining that a specific finding of value was not required. (Editor’s note: According to a well-known family law attorney, this likely would be reversible error if specific findings were requested and should be even if not ...
Georgia Appellate Court Affirms Order Allocating Excess Cash From Business to Husband but Fails to Assign Value to the Business
The appellant wife in this case argued that the trial court failed to divide the marital estate equitably because it did not make an explicit finding of fact as to the valuation of the business that it awarded solely to her but instead only made a finding as to the “excess cash” found in the business. The appellate court affirmed the trial court, explaining that a specific finding of value was not required. (Editor’s note: According to a well-known family law attorney, this likely would be reversible error if specific findings were requested and should be even if not ...
Unraveling Financial Deception: Divorce Case Study for Experts
This case study will be an in-depth examination of a high-net-worth divorce case in which financial deception was prevalent. This case involved unreported income, lifestyle discrepancies, and an undervalued family business. Throughout this case study, you will learn forensic techniques to uncover hidden assets, reconcile unreported income with lifestyle expenses to detect discrepancies and learn how to navigate other complex financial challenges. It will discuss the challenges of valuing the family business and expose fraud ...
Skoglund v. Barbour
While the conclusion to this case was still in doubt due to the appellate court remanding the case to determine whether a gift of a business interest in a community property business was harmful to the community estate, this case was a clear example of lack of documentation as to ownership of a business and later transactions relating to the business.
The Court of Appeals (Arizona) Remands to the Lower Court to Determine Whether Husband Breached His Fiduciary Duty to Wife
While the conclusion to this case was still in doubt due to the appellate court remanding the case to determine whether a gift of a business interest in a community property business was harmful to the community estate, this case was a clear example of lack of documentation as to ownership of a business and later transactions relating to the business.
Divorce court sets valuation date that veers from state’s norm
In Kentucky, the valuation date for a marital dissolution case is generally the date of divorce. In a new case, a court did not use the date of divorce but had good reasons.
Two BV Trends That Have Alarmed BVR’s ‘Power Panel’
A panel of thought leaders commented on two issues they say have raised some very loud alarm bells. One issue involves the methodology and analysis for estimating a discount for lack of marketability (DLOM) and the other issue concerns professional standards.
The South Carolina Supreme Court Reverses the Appellate Court—Goodwill in Dental Practice Was Personal Goodwill and Not Marital Property
Once again, the courts have recognized that, in order to determine whether goodwill was personal or enterprise, it was necessary for the court to have evidence to support the breakdown between personal and enterprise.
Bostick v. Bostick (II)
Once again, the courts have recognized that, in order to determine whether goodwill was personal or enterprise, it was necessary for the court to have evidence to support the breakdown between personal and enterprise.
Another Florida divorce case on goodwill—of the very same entity!
This is the first time in our recent memory in which a multimember entity (a medical practice) had two of its members get divorced (not from each other) and the valuation of personal goodwill needed to be resolved.
Kasnetz v. Kasnetz
The known or knowable issue arises frequently in valuations of businesses. This Hawaii divorce case once again affirmed that information or data that was not known or knowable at the date of valuation cannot be used to determine the value at that date.
Hawaii Appellate Court Affirms Rejection of Value for Violation of Known or Knowable
The known or knowable issue arises frequently in valuations of businesses. This Hawai'i divorce case once again affirmed that information or data that was not known or knowable at the date of valuation cannot be used to determine the value at that date.
Florida court expands excludable personal goodwill in divorce
An important marital dissolution case out of Florida deals with a medical practice with 35 shareholders.