Family law section breakfast 01.04.2017 presentation final

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

Cap-Val American Business
Appraisers
3525 Piedmont Rd NE, Suite 203
Atlanta, GA 30305
678-662-6478
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.

Appraisers
Atlanta, GA 30305
678-662-6478
3
Business Valuation Issues to Start the Year
Objectives:
• Cost effective BV
• Highlight BV issues you might see

Appraisers
Atlanta, GA 30305
678-662-6478
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

Appraisers
Atlanta, GA 30305
678-662-6478
5
Side Issues
• Separate property
• Forensics
• Child support
• Marital estate overall

Appraisers
Atlanta, GA 30305
678-662-6478
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

Appraisers
Atlanta, GA 30305
678-662-6478
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

Appraisers
Atlanta, GA 30305
678-662-6478
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

Appraisers
Atlanta, GA 30305
678-662-6478
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

Appraisers
Atlanta, GA 30305
678-662-6478
10
5. Joint engagements using one appraiser
• Limited or full scope
• Normally a written report
• Stip to results?
• Barriers to use and acceptance

Appraisers
Atlanta, GA 30305
678-662-6478
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

Appraisers
Atlanta, GA 30305
678-662-6478
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

Appraisers
Atlanta, GA 30305
678-662-6478
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$

Appraisers
Atlanta, GA 30305
678-662-6478
14
Q&A

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

Family law section breakfast 01.04.2017 presentation final

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Family law section breakfast 01.04.2017 presentation final

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