Goodwill hunting in
divorce
The value of goodwill can be a big deal in divorce cases. Parties
— and experts — seldom agree on the value of the business in a marital
dissolution situation, especially when substantial intangible assets are
involved. To make matters worse, state statutes may be ambiguous, legal
precedent is inconsistent and courts may be granted significant leeway in
divvying up business assets. This article uses a hypothetical case study to
illustrate the fact that goodwill is both difficult to define and often
understated. It emphasizes that both attorney and valuator need to possess an
in-depth understanding of applicable state statutes and case law.
Which income projections,
when?
Future earnings often serve as the basis of value. But a company’s
earnings capacity is in the eye of the beholder. This article explains that
valuators can look at several factors when deciding the basis for estimating
future earnings, including historic data, management projections and appraiser
analyses. It discusses a recent divorce case, Aukeman v. Aukeman, to illustrate
this process.
Surviving Daubert
challenges
If disputing parties can’t settle their differences, valuators can
act as expert witnesses. But increasingly courts hold expert witnesses to a
higher standard, considering, among other things, the expert’s education,
experience and credentials. It’s imperative to understand the guidelines for
admitting expert witnesses when using valuators in legal contexts. This article
reviews the history of admissibility, focusing on the four-pronged test the
Supreme Court set up in Daubert v. Merrell Dow Pharmaceuticals Inc. to
determine the validity of an expert’s methodology. It lists several problems
that could lead to exclusion during a Daubert challenge, including mathematical
errors and failure to conduct due diligence.
The nuts and bolts of
valuing manufacturers
A reliable manufacturing valuation hinges on an in-depth
understanding of current industry trends and value drivers. This brief article
describes the most useful approaches for estimating a manufacturing firm’s fair
market value and notes some important trends and risks that affect domestic
manufacturer value.