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State law provides the effective date. The valuation is not based on
future income methods. State law may or may not provide for marketability discounts. Marital dissolution is a major force in determining the need for business valuations. Many cases involving divorce will require a business valuation for each marital partner. Determining an accurate assessment of value may minimize the need for litigation. If litigation is required, a variety of valuation issues must be considered. Issues include intrinsic value versus fair value, personal goodwill, fair and reasonable owner’s salary, discounts and premiums for minority versus control positions, and lack of marketability to sell the business. In addition, the valuator may have to determine how the business was held – community property, separate property or some other way. A prenuptial agreement would have to be considered. If the business was started prior to marriage, it may have to be valued at the beginning of the marriage and upon dissolution. In addition, pension, profit sharing and stock ownership plans may have to be valued.
© Copyright 2002 by Delbert W. Exeter. All rights
reserved.
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