The most factually and legally complex area of divorce law is business valuation.
In the 1980s and 1990s huge strides were made in business valuation techniques. This stemmed from the ability of business appraisers to develop intricate spreadsheets. These spreadsheets and “canned” computer valuation programs allowed valuators to create models for valuing businesses that were not possible before the advent of the personal computer. An additional reason for the progress in business valuation technique has been the mergers and acquisitions that occurred during this period. Mergers and acquisitions provide a database to gauge the value of businesses based on actual transactions.
The caselaw involving business valuation in divorce cases is more complex than in other areas of law. Different states have differing positions on whether the business appraiser must differentiate enterprise goodwill from personal goodwill in valuing a closely held business.
This article explores some of the technical details that your lawyer needs to know to represent his or her client. All too often, a lawyer may simply find a business appraiser and defer to the appraiser’s expertise. But without a detailed knowledge of business valuation, the lawyer cannot effectively work with the appraiser to serve the client’s best interests.