Business Valuation

Certified Valuation Analysts

When you own a business and you are contemplating a divorce, look for a Certified Valuation Analyst in Atlanta or any city. Why? Placing a value on a closely held business requires an analysis of your assets, your financial statements, any claims, your businesses earning potential, and the risks specific to your business relative to the market in general. A Certified Valuation Analyst is an expert in the nuances of contentious divorces that involve businesses. He/she is more often than not experienced working with lawyers and understanding equitable distribution to help you achieve the best result.

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Hiring or consulting a lawyer with experience in handling divorces that involve businesses as an asset to be negotiated is critical. But so is a Certified Valuation Analyst, who will work in conjunction with your attorney. One of the most common situations arises when it needs determined whether the business has trues value (aside from owners salary) or only provides a job for the owner. We see this often in our practice. When this is the case, an honest and experienced attorney should be able to circumvent complex, costly negotiations and unnecessary expenditure of funds.

Hire a Certified Valuation Analyst

When hiring an expert, make sure you look for a professional who is credentialed, such as a Certified Valuation Analyst, CVA. They are experts at analyzing cash flow which is used as the basis for valuing your business. However, you should make sure the CVA you hire is a clear communicator who is able to convey complex financial concepts in verbally and in writing to the opposing parties during initial proposal phase, at the negotiating table, and in court to the judge if your case gets to that point.

If you are contemplating divorce, start early gathering as much documentation as you can to support you position regarding your business and its value. At a minimum, a Certified Valuation Analysts will ask for copies of the following documents for the previous three to five years:

  • Financial statements (Income Statement, Balance Sheet)
  • Buy-sell and/or operating agreements
  • Leases or appraisals for real property

In Sandy Springs and Atlanta, Georgia, assets acquired during the marriage are considered marital property subject to equitable distribution. However, only the increase in the value of the business that accrued during the marriage is subject to equitable distribution. This is an important distinction that a family law lawyer can help you with. The latter situation typically requires two separate valuations: one as of the date of the marriage and one as of a recent date (valuation date).

A Certified Valuation Analysis uses the following methods

The asset-based approach, the market approach, and the income-based approach are used by the CVA in Atlanta or Sandy Springs Georgia.  

A CVA in Atlanta or Sandy Springs, Georgia uses expected earnings, risks, the industry, market dynamics, competition and the economy as a whole as factors to determine value. A competent Certified Valuation Analyst will consider all three approaches with these factors as inputs.

Is a Certified valuation Analyst Really Necessary?

If your business is small, has little known value and the spouses can agree on its worth, then probably not. However, the latter is not the case in many divorce situations. Recent transactions and appraisals also mitigate the need for a Certified Valuation Analyst. These value indicators are generally not available with the “owner” spouse likely arguing that the business is worth less and vice versa for the non-participating spouse. Again, in many cases it must be determined whether a business is merely a job for the owner or has intrinsic value beyond the owner’s market salary. Most non-financial people don’t understand value and opposing parties often have varying degrees of what the value of a business is. An expert should be engaged to review the history, market position, financial results, assets, liabilities, and future prospects, etc. of the business.

Brad Burns is a Certified Valuation Analysis. Call direct at 770-380-2406 to discuss you particular situation

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