Situation
A couple in New Hampshire were getting a divorce and one of the parties owned a business in Massachusetts. Each party hired a business appraiser to develop a business valuation of the professional practice. Lou Pereira, Principal of Merrimack Business Appraisers was one of the business appraisers hired.
Merrimack Business Appraisers’ Approach
Lou Pereira prepared a thorough business valuation of the professional practice based on fair market value, the standard for business valuations in the state of New Hampshire. When developing a business valuation for a divorce, the venue is determined by the location of the divorce, not where the business operates. In this case, the standard of value is driven by New Hampshire divorce valuation requirements. Both appraisers came to a similar value for the business overall, but the other business appraisal professional included the personal goodwill of the working owner. Personal goodwill is generally not considered a marital asset in New Hampshire; therefore Pereira prepared a detailed analysis of the personal goodwill of the working owner and removed it from the opinion of business value.
Valuation Outcome
The business valuation determined by the other business appraiser was incorrect by including the personal goodwill of the working owner. Pereira’s business valuation was correct in excluding the personal goodwill enabling both parties to move forward in settling the divorce using his opinion of value.
When Values Matter.
Situation
A couple was getting a divorce and needed a business valuation of the business that the husband owned as part of determining the equitable distribution of assets in the divorce settlement. They jointly hired a business valuation professional within a regional accounting firm to prepare the business valuation. When the valuation was completed, both parties had little to no confidence in the valuation. The business owner could not understand the valuation and how it was determined and the other spouse, an educated professional, was not satisfied with the final deliverable.
They sought another business valuation to be prepared and hired Lou Pereira, Principal of Merrimack Business Appraisers to prepare the business valuation.
Merrimack Business Appraisers’ Approach
Pereira followed his proven and detailed process to prepare the business valuation, adhering to USPAP* development and reporting standards; standards that were established to provide trust in business valuations.
The detailed and thorough valuation report presented what the valuation was as well as why and how the valuation was determined. The final valuation report is replicable, an important factor in providing a business valuation that will stand up to scrutiny.
Valuation Outcome
The business valuation provided by Pereira was detailed, thorough, and objective (~100 pages) and clearly presented for all parties a valuation that was understandable and acceptable. The detail connected the dots, presenting supporting data, giving both parties confidence and trust in the valuation. This contrasted with the expensive and brief PowerPoint deliverable that had left both parties questioning the valuation number and how and why it was determined.
When Values Matter.
* The Uniform Standards of Professional Appraisal Practice (USPAP) are promulgated by the Appraisal Standards Board of the Appraisal Foundation, which is authorized by Congress as the Source of Appraisal Standards and Appraiser Qualifications. USPAP represents the generally accepted and recognized standards of appraisal practice in the United States.
Situation
This unique situation for a business valuation professional came as a result of a lawsuit filed after a divorce. During the divorce process, the husband had paid for valuations of two businesses affected by the divorce. The divorce attorneys who had each successively represented the wife had advised her to get business valuations completed, but she had not done so. Five years after the divorce, she paid for business appraisals and then sued both her divorce attorneys for negligence for not forcing her to pay for business valuations for two businesses involved in the division of assets.
Lou Pereira of Merrimack Business Appraisers was hired by the attorneys for the professional liability insurance companies as the malpractice claim would be settled via the divorce attorneys’ malpractice insurance policies. Pereira’s role was to assess if the business valuations prepared years later were relevant in the settlement of the divorce.
Merrimack Business Appraisers’ Approach
Lou Pereira completed detailed reviews of each of the wife’s appraisals. The detailed reviews included documenting numerous errors, omissions and bias in each appraisal.
Valuation Outcome
The work completed by Merrimack Business Appraisers resulted in the conclusion that the business appraisals developed five years after the divorce, if available then, would not have been accepted by the trier of fact at the time of the divorce settlement, and therefore, the malpractice claim had no merit.
Situation
As part of settling a divorce, a business valuation was needed for a physician’s practice. Each party hired a professional to value the practice, one hiring a CPA and the other party hiring Lou Pereira, CBA, ASA, CVA, from Merrimack Business Appraisers.
Merrimack Business Appraisers’ Approach
- Lou Pereira prepared a thorough and detailed valuation of the physician’s practice.
- The detailed valuation report, exceeding one hundred pages, was prepared to present, if necessary, in court to support the division of assets as part of the divorce settlement.
- The CPA for the other party prepared a four page letter valuing the practice between $50,000 and $100,000.
Valuation Outcome
In court, the report prepared by the CPA was not accepted as evidence. The valuation prepared by Merrimack Business Appraisers at a value of $495,000 was admitted into evidence with Lou Pereira testifying to the valuation. The judge advised the parties not to waste the court’s time, but to settle the matter outside of court based on the accepted evidence of the valuation prepared and presented by Lou Pereira.
Situation
The owner of a $3.7 million technology company was going through divorce proceedings. As an expert with decades of experience in business valuations, Merrimack Business Appraisers President Lou Pereira was retained as the certified business appraiser to determine the fair value to the holder of the business and related marital assets.
Merrimack Business Appraisers’ Approach
Pereira’s business valuation report documented that the owner had started the business before the marriage, and substantiated that the value of the business had increased only marginally during the time of the marriage. The assignment included two valuations: business valuation at the start of the marriage and company valuation at the end of the marriage. The two values allowed the family court to identify the change in value of the business during the time of the marriage, which was the business value attributable as a marital asset.
Valuation Outcome
The result of the business valuation report was that both parties received an accurate allocation as part of the divorce settlement.
Situation
The owner of a $1.8 million professional services business was going through divorce proceedings and sought to retain an expert to determine the fair market value of the business and related marital asset. With an impeccable track record of providing complete, highly detailed, and fully defensible valuations, Merrimack Business Appraisers was retained by the owner for business valuation services.
Merrimack Business Appraisers’ Approach
Lou Pereira, Merrimack’s president, developed a detailed business valuation report that identified and substantiated that $1 million of the business value was attributable to personal goodwill of the managing owner, and not a marital asset. Pereira applied a multi-variable analysis that qualified and quantified the amount of personal goodwill.
Valuation Outcome
As a result of Merrimack’s business valuation, the business owner saved approximately $500,000 in unjustified allocation in the divorce settlement.
