A buy-sell agreement can help avoid disputes over ownership rights, control and the value of a company when an owner leaves the business. Whether the agreement is triggered voluntarily or involuntarily, owners need to protect their financial interests with an agreement that’s legally enforceable and comprehensive. This article points out that it’s important to define buyout terms, avoid ambiguous or outdated valuation formulas and specify the financial data to be used in a buy-sell agreement.
Allegations of hidden assets, or even fraud, can muddy the waters and heighten tension in divorce cases, making a fair resolution difficult. Especially when a private business interest is involved, valuation and forensic accounting expertise is key in helping spouses equitably divide their assets. This article discusses some strategies moneyed spouses sometimes use to attempt to hide business assets, delay revenue recognition or overstate expenses.
When courts or shareholders question valuation results or the conclusions of opposing experts are widely divergent, a rebuttal report can bring much-needed objectivity. This article discusses various uses of rebuttal reports and situations in which they can be useful. It also explains how to determine the best rebuttal report format for a particular situation.
One of the most effective weapons in a forensic accountant’s arsenal is lifestyle analysis. This article talks about how experts seeking hidden assets and income sources conduct such analysis. It discusses several techniques, including the bank deposits, expenditures and asset methods. A sidebar illustrates how tax returns can be used as an investigative tool.
Struggling businesses face different financial challenges than healthy ones do. This article discusses how business valuation experts factor these differences into their estimations when valuing troubled companies.
Most business valuation professional standards recognize two types of engagements: calculations and valuations. This article explains the critical distinction between these types of assignments — and the reason a full valuation report is necessary in most litigation contexts.
In commercial tort claims, courts must decide how much damage the plaintiff suffered from the defendant’s alleged wrongdoing. This article summarizes a recent Eighth U.S. Circuit Court of Appeals case that upheld a jury’s damages award based on lost market value, even though the business wasn’t completely destroyed. A sidebar highlights the benefits of hiring a separate financial expert to conduct a formal appraisal review.
West Plains, LLC v. Retzlaff Grain Co., 870 F.3d 774, 8th Cir., August 30, 2017
In recent years, Delaware’s Supreme Court has shown its preference, under the right circumstances, for market-based indicators of value in statutory appraisal cases. This article summarizes a recent dissenting shareholders case in which the court concluded that the best evidence of fair value was the target company’s unaffected stock price. Conversely, a sidebar highlights another case in which the court relied on an expert’s discounted cash flow analysis in the absence of reliable market-based indicators of value.
Courts tend to prefer the market approach in business valuation, because it’s based on real-world “comparable” transactions. This article identifies different pricing multiples that may be used in the market approach and explains when each one tends to work best. Statistical tools can help business valuation experts evaluate which multiples are most relevant based on market evidence.
The laws in most states make a distinction between marital and separate property for purposes of marital dissolution. In cases where property increases in value during the marriage, experts may be hired to determine whether that appreciation is passive or active. This article explains the difference between these terms and why it matters when divvying up a marital estate in divorce. A sidebar highlights the need to take a holistic approach when differentiating between the active and passive appreciation when valuing a business.
Bair v. Bair, 214 So. 3d 750 (Fla. 2nd DCA 2017)