The source of disputes involving the value of a business can be commercial and personal. An example of a commercial dispute involving business valuations is a shareholder dispute. An example of a personal dispute involving business valuations is in the marital dissolution arena.
The ultimate resolution of shareholder disputes typically involves the development of a value for the dissenting shareholder’s equity ownership interest in the business. The first step in developing the value of this interest is determining what standard of value should be used. In Maryland, the standard of value used for this purpose is fair value. The definition of fair value for this purpose is fair market value excluding the application of any discount for lack of control (minority interest discount) and discount for lack of marketability. Other states and jurisdictions may mandate different standards of value. Make no mistake, a shareholder dispute is nothing more than a “commercial divorce”, with emotions running as high as a personal divorce matter. The Vallit team has significant experience in working through the litigation process in the development of business valuations in shareholder dispute matters.
Vallit’s expert team can assist in valuing ownership interests in businesses for marital dissolution. Business valuations for marital dissolution can have nuanced components such as personal goodwill and non-marital asset deductions. When determining the marital component of the ownership interest, we are experienced in analyzing the active vs. passive appreciation of a business owned prior to or inherited during a marriage as well as the personal goodwill held within that interest. An active vs. passive appreciation analysis can determine what the value of a pre-marital or inherited business owned prior to the marriage was worth at the time of the marriage/inheritance and assess how the active and passive factors have influenced the growth of the business. This can be critical in the Court’s determination of a marital property award.
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Vallit is focused solely on dispute consulting, business valuation and forensic accounting. Our senior team members have testified over 200 times in Federal, State and International courts. Our dispute expertise ranges from family law to complex commercial and intellectual property matters in a wide variety of industries. In non-disputes, our valuation reports are relied on by estate and trust attorneys, auditors, and business decision makers for tax, financial reporting and transaction purposes.