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Do you know what your business is worth? Our business valuation experts provide you with an objective, expert view of your company – while helping you understand the value drivers of your business. In addition to preparation for sale, knowing the actual value of your business is crucial for a number of reasons:
Your business' balance sheets and financial statements are not enough to present the true value of your company. An accurate valuation requires a customized approach. Our Certified Valuation Analysts integrate basic valuation principles with the very latest developments in business valuation theory to arrive at the most comprehensive valuation possible. We can also help you comply with the complex requirements of the Statements of Financial Accounting Standards (SFAS) Nos. 141 and 142. These standards require companies to perform a valuation to determine the current fair value of intangible assets and goodwill acquired in a business combination or merger and to periodically test previously recorded goodwill and intangibles with indefinite lives for impairment. For more information about our Business Valuation practice, email BVLS@SCandH.com or call (410) 403-1500 | (800) 832-3008.
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Valuations Insights, Third Quarter, 2008 Double-Dipping Rationale May Have Prompted Court To Prefer Asset Approach Wold v. Wold, 2008 N.D. 14 WL 183527 January 23, 2008 In valuing an oil services business for purposes of divorce, the wife's expert used an income-based approach to arrive at a value of $640,000. The husband's expert used an asset approach to value the business at $168,000. Without going into great detail regarding these disparate conclusions, the trial court found that the husband's approach was " much more logical as it relates to these facts and this business." Although the business was capable of generating net income in excess of $200,000 per year, its success depended largely on the husband's entrepreneurial activities and contacts among "good old oilfield boys," the court said. That trust and network was not easily transferable, and would dissipate "without tremendous assistance from the seller over time." Because a knowledgeable buyer would pay for little more than the value of the hard assets, the court settled on a value of approximately $236,000 for the entire business. But the court also gave the wife a slightly larger portion of the marital estate, including the building out of which the business operated; it also granted her substantial spousal support for twenty years (after only a thirteen year marriage). The husband filed a motion for reconsideration, arguing that the district court erred by awarding the wife the building without making an appropriate downward reduction in the value of the business. Income can't come from an 'empty bag' The district court declined to reconsider its disposition of the business assets. In effect, [the husband] asks that a company which annually nets hundreds of thousands of dollars have a valuation of $34,000. Although the Court does not accept the income approach recommended by [the wife], the Court will not depart from reality to the point of finding that income of that amount can come from an empty bag. Both parties appealed to the state Supreme Court, with equal lack of success. The value determination was well within the range provided by the parties' experts, the higher court held, and seemed "reasonable, if not modest." It also affirmed the lower court's rationale for choosing an asset-based versus an income approach in this case, especially as it related to the particular nature of the oilfield service business. Lastly, the court acknowledged the "intertwined" nature of property division and spousal support, and specifically noted the husband's earning capacity "in excess of $200,000 per year." Without referring to any rationale against double-dipping, the court confirmed the substantial award of spousal support in this case as "justified to balance the economic burden" of the parties' divorce, including the exclusion of the wife from the family business. |
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