Business Valuation Disputes
Business valuation issues arise in many different contexts. Often agreements between owners require a valuation, but disputes arise over whether those valuations should exclude intangible value like goodwill (which may comprise most of a company’s value), or whether large discounts will be imposed. In addition, controlling shareholders or owners may reduce the apparent value of the company by causing it to incur expenditures that a non-owner would not be permitted to incur or take out. These can be “adjusted” back in the process of determining true value.
The bottom line is that differences in valuation standards and approach can result in vastly disparate values. A one-third owner of a business making a $10 million annual profit may find his interest valued at one hundred dollars, or at $10 million or perhaps at $20 million. The latter may be closer to the true value, but it will not likely be “book value” or “fair market value.”
It is important to get knowledgeable assistance as early as possible in a valuation situation. James McElroy & Diehl has attorneys who know this area of legal practice very well. Our attorneys are highly experienced at dealing with valuation issues, including the preliminary but necessary steps of obtaining and analyzing accounting information, negotiating valuation language, and engaging valuation experts who may perform business appraisals and testify. They have examined (and cross-examined) many, if not most, of the valuation experts in the region, multiple times, and they thoroughly understand the different methods that can be used to value a company.