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  • what are guidelines or rules are used to determine value of a business

    I own a small business which I believe was worth more on date of marriage than separation date.

    Having purchased business I know how to value them from a business perspective but not sure what tests the courts use.

    Does anyone know what rules/tests/guidelines courts use to value a business.

    Are there any specific cases that are relevant?

    I appreciate it's wide open and complicated depending on numerous factors, but any comments would be appreciated.

  • #2
    The court will likely order an appraisal by a certified business appraiser

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    • #3
      Thanks, I am aware of that, but are there specific metrics accepted by the courts. I.e multiple of earnings or what's added back in.

      I don't want to get into a dual of bv experts. Are there any specific judgments that address the method of valuation.

      Comment


      • #4
        They will look at your business in light of accepted metrics for your industry.
        They will look at comparable businesses that have actually sold.

        They will consider multiples of sales, multiples of earnings.

        They will also do a balance sheet valuation.

        Finally, if it is a profitable business they should do an NPV calculation.

        What industry?

        One way to avoid the dueling valuations scenario would be to to agree upon a valuator in advance of the appraisal.

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