Business Valuation Articles

A professional valuation is essential for manufacturing business owners considering a sale, applying for financing, or conducting estate planning, as it provides a more accurate picture than simple industry formulas.

In a recent divorce case, an Arizona court of appeals vacated a trial court’s ruling regarding the value of a 25% business interest owned by the wife.

A recent decision from the U.S. Court of Appeals for the Second Circuit provides a useful primer on how to value collateral for bankruptcy purposes.

Under the market approach, the value of a business is derived from comparisons between the subject company and transactions involving similar businesses.

In Sipko v. Koger, Inc., the New Jersey Supreme Court found that a discount for lack of marketability (DLOM) was inappropriate, noting the “defendants’ bad-faith behavior throughout this 15-year litigation.”

The usual methods of calculating lost profits may fall short when a start-up is involved.

Valuation experts commonly use the reasonable royalty method to measure damages in patent infringement cases. When a royalty base is the “entire market value,” an expert may apportion it among the product’s infringing and noninfringing components.

In M&A transactions, disputes sometimes arise over contractual purchase price adjustments, representations and warranties, earnout provisions, or alleged misrepresentations by the seller.

A recent federal district court case illustrates what can happen when business valuations are prepared by attorneys rather than qualified valuation professionals.

In today’s tight labor market, human capital is critical to the success of a business. Although it’s not usually reported on the balance sheet, human capital can be a valuable asset.