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Monthly Archives: January 2018

We have distilled decades of experience at the intersection of law, business and finance into a suite of articles to help our clients make sense of business valuation, forensic accounting, and litigation support. Please visit our site regularly for our latest content.

  Splitting up a marital estate can be a long and complicated process, particularly if one of the assets includes a privately owned business. Fortunately, a valuation analyst can assist attorneys and their clients address these issues – even at the early stages of the matrimonial action. These preliminary issues often include, but may not be limited to: How much is the business actually worth? Do you need to be concerned about the issue of “double dipping” when considering the valuation of a business and the money spouses support obligations? Is the spouse that owns and operates the business deceptive when it comes to reporting his/her income? In this blog post we quickly discuss these three issues.  For those of us that travel down this road often – you know that the totality of the financial concerns in a matrimonial matter can be significant. How much is the business actually worth? There are three methods used to value a business: the asset, market and income approaches. All of these techniques start with the analysis of the company’s financial statements. But discovery shouldn’t stop there, especially for spouses who aren’t involved in day-to-day business operations. Valuation experts should be given equal access to financial records and opportunities to tour the company’s facilities and interview management. Inadequate discovery can cause an expert to miss critical information and possibly lead to an inaccurate conclusion of value. If the business interest was owned prior the marriage, it might be appropriate to include only the […]

Challenges In Valuing Family Owned Businesses

Posted in Business Valuation, on Jan 2018, By: Mark S. Gottlieb

  Family-owned businesses aren’t usually run like large public companies. From the Rockefellers to the Kardashians, working together can bring out the best – and worst – in families. Here are four key issues to consider when valuing these entities. 1- Are family members on the payroll? The terms “family business” and “nepotism” often go hand in hand. Although some business owners hire family members because they’re perceived as more trustworthy, many hire them out of obligation or to satisfy a desire to pass the business on to their offspring. When valuing family-owned entities, business appraisers objectively consider whether family members are qualified for their positions and whether their compensation is reasonable. In some cases, management of a hypothetical buyer might want to consolidate family members’ positions and use fewer people to perform their duties. As a result, valuation professionals often make an upward adjustment to cash flow to reflect the excess expense of employing relatives. But the reverse may also be true. Some family businesses overwork or underpay related parties. Consider, for example, business owners whose passion for their work and desire to succeed lead them to work exceptionally long hours. When evaluating a related party’s compensation, experts look beyond the family member’s base pay. For example, they must also adjust for payroll taxes, benefits and extraneous perks. Perks may include such things as allowances for luxury vehicles, country club memberships or loans at below-market interest rates. 2 – Are there other related-party transactions? Family-owned businesses may engage in […]

Welcome To The Tax Cuts & Jobs Act

Posted in Business Valuation, on Jan 2018, By: Mark S. Gottlieb

I know that 2018 has begun with frigid temperatures for those of us in the Northeast, but I want you to get up from your desk, open up your office window and listen to what’s happening outside. That galloping sound you hear isn’t construction work, it isn’t local traffic, or planes flying above. It is the masses of divorcing couples, business owners, and retirement minded individuals running to their matrimonial, estate and corporate attorneys. On December 22, 2017 Congress passed and President Trump signed into law The Tax Cuts and Jobs Act (hereafter, “the Act”). The Act is the most significant change to the current tax law in three decades. In its most simplistic terms the Act (1) lowers individual and corporate tax rates, (2) eliminates multiple tax credits and deductions, (3) increases the child tax credit, and (4) repeals the healthcare individual mandate penalty. Matrimonial and Family Law Attorneys should be aware that for those that separate and/or divorce after December 31, 2018 alimony payments will no longer be taxable to the recipient or deductible by the payer. Gift and Estate Attorneys should note that the estate and gift tax exclusion amounts have doubled after December 31, 2017 and before January 1, 2026. Corporate Attorneys should know that the corporate income tax rate has been simplified to a flat 21 percent and that owners of pass-through entities will be taxed at a 20 percent income reduction calculation. So the question you may be asking is: Why is a boutique […]