Business Valuations
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DuPage County Business Valuations Attorneys

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DuPage County Business Valuation Lawyers

Businesses do not have price tags. Moreover, the statistics in a balance sheet can sometimes be deceptive; for example, a particular accounts-receivable balance may be, essentially, uncollectable. Further complicating matters, all businesses have intangible assets, most notably customer and supplier goodwill. The best way to value businesses, for divorce purposes, is to take a measured approach that relies on established methods.

At Pesce Law Group, P.C., we routinely handle business valuation and property division matters. Although every case is different, we rely on proven techniques that have been developed and refined through many years of practice. Our goal is to craft an equitable property division that upholds your legal and financial interests, both in the short and long term.

Factors to Consider

Ever since it was released in 1959, IRS Revenue Ruling 59-60 has been the leading authority on this subject, and Illinois courts have consistently upheld both its specific findings and general principles. To value a business, for divorce purposes, the examiner should consider:

  • The type and nature of the business, beginning with its inception date,
  • Company's maximum earning capacity,
  • Stock's actual market value,
  • Business' current financial condition,
  • Overall economic outlook in general, and the industry's outlook in particular,
  • Value of comparable stocks being traded on the open market
  • Stock sales and number of shares,
  • Dividend capacity, and
  • Any intangible assets, including business goodwill.

The Ruling stresses that each valuation is fact-specific, and the prongs should be given varying weight according to individual circumstances.

Overall Approaches

During the valuation, the appraiser may use one of three overall models, in addition to the specific questions in Revenue Ruling 59-60:

  • Market Approach, which uses comparable sales as a guideline,
  • Asset Approach, which considers only the enterprise's tangible and intangible assets, or
  • Income Approach, which gives great weight to the company's actual and potential income.

Choosing a Valuator

Not all accountants are necessarily qualified to conduct a business valuation, especially where small or medium-sized businesses are concerned. The American Institute for Certified Public Accountants requires that a CPA complete additional training to be an Accredited Business Valuator. That training includes, at a minimum, a completed apprenticeship program, a written exam, and additional annual continuing education hours. Pesce Law Group, P.C. attorneys network with professionals in other disciplines, so we are an excellent resource to locate qualified appraisers.

A proper and accurate business valuation is an integral part of a divorce property settlement. For a free consultation with experienced family law attorneys, contact The Pesce Law Group, P.C. at 630-352-2240. Convenient payment plans are available.

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