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Family law section breakfast 01.04.2017 presentation final

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Family law section breakfast 01.04.2017 presentation final

  1. 1. 1 DeKalb County Bar Association Family Law Section Breakfast January 5, 2017 Business Valuation Issues to Start the New Year Cap-Val American Business Appraisers 3525 Piedmont Rd. NE, Suite 203 Atlanta, GA 30305 Mark A. Dayman CPA/ABV/CFF, ABAR, CVA 678-662-6478 mdayman@capval-llc.com
  2. 2. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 2 Disclosures • This presentation is not intended to reflect the opinions or positions of the author in relation to any specific case, but rather to be illustrative for educational purposes, and to provoke discussions, some of which may be controversial. • Any statement, comment or notations of any kind made by the author is assumed to be hypothetical in nature and made to generate discussion. • The legal concepts presented herein are from the non-attorney expert’s perspective. They are not intended to present an interpretation of any law, but stimulate conversation and highlight areas which may need investigation as they pertain to your work.
  3. 3. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 3 Business Valuation Issues to Start the Year Objectives: • Cost effective BV • Highlight BV issues you might see
  4. 4. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 4 Valuation and Forensic Services are expensive • Discovery • Full appraisal with or without a written report • Mediation • Opposing expert values • Trial prep • Trial Business Valuation Issues to Start the Year – Cost Effective BV
  5. 5. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 5 Side Issues • Separate property • Forensics • Child support • Marital estate overall Business Valuation Issues to Start the Year – Cost Effective BV
  6. 6. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 6 What Are the Risks? • What is your risk? • How about your client's risk? Relied on other side's value • Was there adequate inquiry and knowledge? • Was there no $$ for experts? • Marital estate value may be understated Missed the business all together • Marital estate undervalued • Money was left on the table Business Valuation Issues to Start the Year – Cost Effective BV
  7. 7. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 7 1. If there is any suggestion of a business interest, start gathering information early → Industrial Age → Information Age → Digital Age • Equity could be more than stock or LLC interests 2. In initial document production, seek 5 years of business returns & F/S, and Form 1040’s Business Valuation Issues to Start the Year – Cost Effective BV
  8. 8. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 8 3. Hire an appraiser for 1-2 hrs. as an advisor • Guidance on scope • Likely issues to expect • Clues about the likelihood of value • General materiality of business to the marital estate • Make informed decision about the next step Business Valuation Issues to Start the Year – Cost Effective BV
  9. 9. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 9 4. Limited scope appraisal – “calculation of value,” estimate of value, no written report • Obtain a reasonable understanding of value or range of value • Improve understanding of importance of business to the overall marital estate • Great for negotiations and mediation • Will need to be upgraded if case goes to trial Business Valuation Issues to Start the Year – Cost Effective BV
  10. 10. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 10 5. Joint engagements using one appraiser • Limited or full scope • Normally a written report • Stip to results? • Barriers to use and acceptance Business Valuation Issues to Start the Year – Cost Effective BV
  11. 11. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 11 6. If the business owner hired an appraiser already • At a minimum, hire an appraiser as an advisor for 1-2 hrs. • Review the report, or schedules • Not an opinion of value, not an opinion of credibility • Seek observations • Areas of strength and weakness • Lines of inquiry for a deposition Business Valuation Issues to Start the Year – Cost Effective BV
  12. 12. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 12 • Value in place and continued use • Minority versus control • Owner's compensation • Jointly owned businesses • A few thoughts about personal goodwill Business Valuation Issues to Start the Year –BV Potpourri
  13. 13. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 13Business Valuation Issues to Start the Year –BV Potpourri Key Person/Personal Goodwill Discount Example of Application Book Market Net worth of business 2,500,000$ Value Value Less tangible assets (1,000,000) Less known intangible assets (1,500,000) Tangible current assets 750,000$ 750,000$ Plus tangible liabilities 600,000 Property and equipment 100,000 250,000 Intangible assets - IP - 1,500,000 Goodwill in all forms 600,000 Goodwill all forms - 600,000 Gross % allocation to Key Person/PGW 40% 850,000$ 3,100,000$ Gross $$ allocation to Key Person/PGW 240,000$ Tangible current liabilities 400,000$ 400,000$ Owner age 40 Tangible Long-term debt 200,000 200,000 Assumed future holding period in yrs 10 Net worth 250,000 2,500,000 Assumed discount rate 15% 850,000$ 3,100,000$ Present value of Key Person/PGW 59,324$ SAY $$ 60,000 Marital value of business for equitable distribution purposes: Gross value of the business 2,500,000$ Less Key Person/PGW (60,000) Net marital value 2,440,000$
  14. 14. Cap-Val American Business Appraisers 3525 Piedmont Rd NE, Suite 203 Atlanta, GA 30305 678-662-6478 mdayman@capval-llc.com 14 Q&A
  15. 15. 15 DeKalb County Bar Association Family Law Section Breakfast January 5, 2017 Business Valuation Issues to Start the New Year Cap-Val American Business Appraisers 3525 Piedmont Rd. NE, Suite 203 Atlanta, GA 30305 Mark A. Dayman CPA/ABV/CFF, ABAR, CVA 678-662-6478 mdayman@capval-llc.com

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