We are assisting an increasing number of clients of family law firms involving complex property settlements and would like to share some of our thoughts with you.
Based on our experience the main issue in any property settlement is determining the value of the asset pool. This is often made more difficult where one of the assets is an interest in a business for the following reasons:
- Husband or wife has limited involvement or knowledge
- Significant gap in value expectation
- Business is in financial distress
- Economic life cycle of the business
- Value to owner versus market value
Working with family lawyers and their clients we perform the following tasks to help overcome some of the inherent issues associated with a business valuation:
- Analyse prior years’ financial statements and tax returns
- Peruse internal documents (e.g. shareholders’ agreements, minutes of meetings)
- Obtain financial information provided to financiers (e.g. cash flows, profit forecasts)
- Identify non-financial drivers that affect value
- Investigate any recent decline in profitability
- Consider recent transactions involving a transfer in business interests
- Conduct an appraisal of the business to form an opinion of the indicative range of values
- Ensure the single expert, if appointed, is properly briefed about the business
- Educate your client about the valuation process including concepts specific to Family Law
Having a good understanding of the value of the asset pool, in particular the business, in the early stages of a property settlement can save your client time and money.
If you would like to know more about our Shadow Expert service or how we could help an existing client, please feel free to contact John at de Blonk Smith Young on (07) 3221 4465.