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Q:  Why do I need a business valuation for my divorce?
A:  In divorce, all marital property must be valued for the purpose of property division or equitable distribution. An ownership interest in a closely-held business may be marital property and must be valued.
Q:  What is a business as it pertains to divorce?
A:  The definition of a business for divorce has a very broad definition. The following are deemed to be businesses:

 

  • Corporations, Partnerships, and LLCs
  • Sole Proprietorships
  • Professional Practices – Professional practices include medical practices, dental practices, law practices, accountants, architects, financial consultants, IT consultants, and other consulting services. The practicing party does not necessarily have to be required to be licensed by a governing agency to be considered a professional.
  • Agencies and Franchises
Q:  What are the different types of business valuations?
A:  There are two main types of business valuation engagements, a Calculation of Value and a Conclusion of Value. A Calculation of Value is an estimate of the value of the business and is generally sufficient for mediation or negotiation. A Conclusion of Value is a full appraisal of the business and is generally needed for trial and expert testimony.
Q:  Is there a difference in cost between a Conclusion of Value and a Calculation of Value?
A:  Yes. The steps required for a Conclusion of Value are more extensive than those performed for a Calculation of Value, so a Conclusion of Value engagement costs more. While each engagement is unique, you should expect to spend $3,500 to $5,000 for a Calculation of Value and $6,000 to $40,000 for a Conclusion of Value.
Q:  Why does a valuation cost so much?
A:  An accurate valuation requires considerable fact-finding related to the company, including personal interviews and site visits, analysis of the company’s financial performance over several years, analysis and comparison to similar companies, analysis of the economic environment in which the company operates, and other factors. We don’t simply enter your company’s financial information into a canned program that spits out a result. Rather, our analysis is specific to your company. If your case goes to trial, you can be confident that our experts will be knowledgeable, prepared, effective, and able to stand up to cross-examination.
Q:  What information must I provide for the business valuation?
A:  The valuation firm should provide a document request and a questionnaire. The most important documents are business and personal tax returns for 5-years prior to the date of separation or date of division. The questionnaire will include many questions on the business and how it is managed. Following is a list of the most important documents to provide:

 

  • Corporate Tax Returns for five fiscal years prior to the date of valuation. (Required)
  • Owners’ Personal Tax Returns five fiscal years prior to the date of valuation. (Required)
  • Balance Sheets for five fiscal years prior to the date of valuation and as of the Valuation Date. (Required)
  • Income Statements for five fiscal years prior to the date of valuation and as of the Valuation Date. (Required)
  • Asset list and detail depreciation schedules. (Required)
  • W-2’s or Annual Payroll records for officers/owners (Required)
  • All Operating Agreements (LLC), Shareholders’ Agreements (Corporation), or Partnership Agreements

Providing as much information as possible in a timely manner will assist the valuator in completing the valuation quickly and accurately.

Q:  How long does it take to complete the business valuation?
A:  Generally it takes 30 to 45 days to complete the valuation after all of the required information has been received. Required information includes answers to questions and requests for additional documents. Delays in obtaining documents and answers to questions will delay the process.
Q:  Do I need to hire a professional business valuator or can my CPA do the valuation?
A:  You need to hire a professional business valuator that is accredited by one of the national business valuation organizations. Your CPA that prepares your tax returns and/or financial statements may be an accredited business valuator but may have a conflict of interest that will disqualify his or her valuation report in court. Your attorney can assist you in finding an accredited business valuator.

 

Our business valuators are bound by the professional standards to the National Association of Certified Valuators and Analysts (NACVA). This ensures that all work performed and reports issued will comply with the standards required of an expert who may be called upon to testify in court.

Q:  Do you provide appraisals of real estate or other tangible property?
A:  No, Valuepointe.biz is not an appraiser. If your engagement requires valuation of real estate or tangible assets, we will work with your appraiser to develop our final opinion of value.