Situation
The owner of a fractional ownership interest in a mid-size business was going through a divorce and failed to obtain a professional valuation before discovery closed. However, the spouse had hired a local CPA firm to do a valuation of the ownership interest, valuing it at more than $250,000. Merrimack Business Appraisers President Lou Pereira was brought in by the owner’s attorney to critique the spouse’s business valuation.
Merrimack Business Appraisers’ Approach
- Pereira thoroughly reviewed the spouse’s business valuation report and identified several errors and omissions that had resulted in an overstatement of value.
- As discovery had closed, Pereira provided a comprehensive written critique to the attorney, which explained the specific errors and deficiencies in the spouse’s report, including detailed calculations that defined the magnitude of these errors and omissions and their impact on the value conclusion.
- In addition, Pereira consulted with the attorney and advised during the attorney’s cross examination of the appraiser from the CPA firm.
Valuation Outcome
Leveraging Pereira’s appraisal critique and expert advice, the attorney presented in court a well-crafted interrogation that revealed the errors and omissions and their significant impact on the value of the busines. The judge ruled accordingly, reducing the value conclusion of the ownership interest to $110,000. This saved the owner more than $140,000 in unjustified asset allocation.
