How do innocent spouses spell relief?

Divorcing spouses frequently engage valuation experts to divide their assets, particularly when the marital estate includes a private business interest. But in divorce cases, owners are often tempted to underreport income or exaggerate expenses, which may cause tax problems. This article discusses the recently expanded innocent spouse rules designed to help protect innocent spouses from joint liability for their spouses’ tax avoidance schemes.

Don’t forget about management interviews

Management interviews bring meaning to companies’ financial reports and identify other external resources (such as trade associations or government agencies) from which valuators can draw useful, objective data. This article reveals how valuators ensure their management interviews elicit the information they need to properly assess a company’s value.

Every business is a risky business

Assessing a company’s risk is an important part of estimating its value. The higher a company’s risk, the lower its value. This article explains how external threats and internal weaknesses increase risk, while strengths and opportunities minimize it. The article suggests a framework for analyzing a company’s risk factors and determining their impact on value.

Picking the right pricing multiple

In using the market approach, a valuator derives a business’s value by comparing it to similar private or public companies involved in a transaction. Choosing the appropriate pricing multiple is key to deriving an appropriate value. This brief article reviews the most common pricing multiples, such as price-to-earnings and price-to-discretionary-income, and discusses their virtues and drawbacks.

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