Businesses are valuable assets. Like all assets, they are part of the divorce process. Establishing the value of a marital business is a vital element when it comes to divorce property division matters. Therefore, an experienced Las Vegas business valuation attorney knows that hiring a business valuator is an important first step.
Business valuators are professionals who specialize in assessing the worth of a business. They gather numerous financial and operating reports and conduct a thorough analysis. Then they provide a written report of their findings. Business valuation reports may contain more than one value amount. These can include investment, buyout, book, and cash values.
A business valuation also includes any intangible assets owned or controlled by the business. The value of licenses, patents, trademarks, intellectual property rights, or a celebrity name are often understated. This is common in the technology and entertainment industries. It is also prevalent with professionals going through a divorce. Additionally, a business valuation considers:
- Past and present financial earnings
- Balance sheet condition
- The competitor landscape
- Current industry trends
- The value of real property, if any
There are approximately 5,000 business valuators in the United States. Each has one or more forms of qualifications. Importantly, the Clark County Family Court does not certify all business valuators. They need court certification to testify, or their reports to be evidence, in family court cases. Our divorce law firm only retains court certified business valuation experts on your behalf.
Business Valuation Reports
Once compiled, the valuator issues a formal report. Assigning a value to a business is a sophisticated exercise. Reputable valuators may each come to different conclusions. While it’s unlikely to come to the exact same values, business valuations should appear in the same range. It’s not unusual for the Las Vegas divorce attorneys representing both parties to agree on the business valuator. However, if they can’t agree, each spouse hires their own independent one.
Understanding the limits of what a business valuator does and does not do is essential. Business valuators prepare their reports using existing financial and market data. They do not question the data nor seek to locate any hidden assets. So hiring a forensic accountant may be necessary if fraud is suspected.
The Value of Goodwill
Goodwill is an intangible asset of a business. In simple terms, it’s the value assigned to a business for continuing operations and maintaining a means to generate income. For example, a business has a net book value of $5,000,000. But the appraisal value is $6,000,000. This means the value of goodwill is the $1,000,000 difference. There is often a direct link between the goodwill value and the business owner(s). It’s even stronger for “working owners” because revenue generation requires their personal efforts. Professional practices such as medical, legal, financial advisers, CPAs, brokerages, etc. value differently than other businesses because goodwill is usually a key asset.
Las Vegas Business Valuation Attorney
Thoroughly understanding the business valuation process is important. But what’s even more important is knowing who the business valuator is. Each valuator has unique tendencies. Divorce attorneys Jennifer V. Abrams and Vincent Mayo have extensive histories with many local business valuators. They know the ins-and-outs of business valuations and those who provide them. Most importantly, they use their knowledge to your advantage. Contact our office at 702-222-4021 for a courtesy phone consultation at no charge. One of our Nevada State Bar Board Certified divorce attorneys will be glad to speak with you.