Wilson v. Wilson: A trial court valuing a closely held business in a divorce is not to determine the fair market value of the entity but its fair value.
By Laura Morgan, Family Law Consultant
Valuation of a company based on liquidation approach in order to determine the value of wife’s stock was not warranted; because the company was not for sale and was not being liquidated at the time of trial, using the liquidation approach and applying the fast sale discounts resulted in a lower valuation than one would otherwise obtain.
Reprint with permission.
Laura Morgan is a Family Law Consultant. Laura is available for consultation, brief writing and research on family law issues throughout the country. She can be reached through her Web site.
The task of reviewing a valuation report can be a daunting one, especially to someone without valuation training. Family law attorneys are often presented with valuation reports for their clients or for the opposing side and are faced with the question of whether the valuation is “good.” Short of becoming an appraiser overnight, what is a busy attorney to do to decide whether a valuation report passes a basic “smell test”?