Business Valuation


 

Business valuation is one of the most tedious and complex matters regarding family law and more specifically, in instances of legal separation or dissolution of marriage. Because the State of Arizona is a community property state, each spouse has a one-half interest in any property acquired during the marriage through one or both of their efforts. While half may seem like a simple way to divide assets, the process gets sticky when it comes to businesses of any size. The issue of the monetary value of a business comes into question, hence the need for a business valuation.

The tools used in business valuations have evolved in leaps and bounds since the 1980’s with the growth in accessibility of computers and their technological advances in both hardware and software. In addition, the large number of company acquisitions and mergers during that time provided attorneys and business appraisers with a larger database of information on the subject. They were able utilize this information to gauge more accurately the value of businesses.

Despite the advances in technology, business valuations are still highly complicated procedures. There are many methods with which to complete a valuation but many start by adding the value of all the company’s hard assets: tangible items such as equipment and supplies. In the State of Arizona, the company’s “goodwill” may also be valued. While intangible, “goodwill” can be considered an asset as well and refers to the reputation of a business or other perceived factors that would contribute to a higher probability of repeat customers. To complete these complex appraisals, an expert is often called in. With their help, it is possible to determine the value of a company in one of many different ways. There is the book-value method which is based solely on hard assets, the fair-market method based upon how much a buyer would willingly pay for the business, as well as the rule-of-thumb method and the fair-method. Because there are so many ways in which to complete a valuation, not all experts will reach the same conclusion on value. It is the court’s decision which testimony to follow when making its ruling.

The lawyers handling your business valuation play a crucial role. Because not many family law judges have a strong background in accounting or finances, the attorney is tasked with partnering with the business valuator to clearly and eloquently discuss the tedious calculations which make up a business valuation. It is also the attorney’s task to fight for your best interest in these matters. Let the experienced family law attorneys at Giordano Spanier & Heckele Law Firm help with your business valuation matters. Call today for a consultation (520) 339-6804 or email [email protected]