Key Issues in the Valuation of Small Businesses for Divorce

February 25, 2010
1PM - 3PM EST
beginning at Noon Central, 11AM Mountain, 10AM Pacific

Moderator – Chris Hamilton, CPA, CFE, CVA, DABFA
Principal, Arxis Financial, Inc.
Written or coauthored four BV courses
Member, NACVA Course Review Committee
Recipient of NACVA’s Circle of Light Award for teaching excellence

Michelle Gallagher, CPA/ABV/CFF
Principal, Gallagher & Associates CPAs, PLC
Current member, AICPA ABV Examination Committee
Former member, AICPA Forensics and Litigation Services Committee
Former member, AICPA/AAML Divorce planning conference committee

Ron Seigneur, CPA/ABV/CFF, ASA, CVA
Managing Partner, Seigneur Gustafson LLP
Current Chair of the Colorado Society of CPAs
Past Chair of the AICPA Accredited in Business Valuation Committee
Past Chair NACVA's Professional Standards Board

Handouts:

VPS Webinar PowerPoint slides
Webinar transcript
Various articles and papers

Learning Objectives:

The participant will learn the issues that can make valuations of small businesses and professional practices more difficult than larger businesses
The participant will learn how to deal with practice goodwill vs. personal goodwill vs. key person vs. noncompete agreements
The participant will learn about what valuation approaches and methods work and those that don’t
The participant will learn about dealing with normalization adjustments including non-market compensation issues
The participant will learn about tax affecting pass through entities
The participant will learn about BV standards and the use of calculations and calculation reports
The participant will learn about issues in the down economy

Webinar Outline:

Examples and techniques for separating personal/professional and business/practice goodwill in divorce valuations
- Quantitative methods
- Qualitative methods, e.g. Multi-attribute Utility Model
- Noncompetes as proxies
- Key person issues in small practices
- Excess earnings problems
  - Is there any goodwill if there are no excess earnings
Valuation approaches and methods and levels of reliance
- Guideline company transaction method and supporting databases
  - Data constraints and level of reliance – primary vs. corroborating
  - Statistical techniques, e.g. Direct Market Data Method
  - Rules of thumb
  - Buying a job values
- Capitalized earnings/cash flow method
  - Rate of return inputs
  - Specific company risk methods
    - Qualitative
    - Quantitative
      - Butler Pinkerton Total Cost of Equity
      - Risk weighting models, e.g., Build Up Summation Model
  - Weighting of historical earnings
- Normalization adjustments
  - Compensation
    - Sources and reliability of data
    - Are valuation analysts qualified to make these adjustments
  - Control vs. minority
  - Taxes
  - Depreciation
  - Working capital
  - Non-operating assets and perks
Pass through entities/S Corps and taxation
- Tax affecting and calculation of S Corp premiums
- What to do in a state that does not allow tax affecting in divorce valuations
- Relationship to personal balance sheet
Business valuation standards – Do the Family Courts care
- Use and support of calculations and calculation reports
- Bolster the credibility of your analysis and report
- How attorneys are using them to discredit valuation analysts
Divorce valuations in the current economic downturn
- Adjustments

The VPS/FCG StraightTalk webinar series brings you outstanding continuing professional education on business valuation and litigation topics. The webinars are co-sponsored by Valuation Products & Services and the Financial Consulting Group both owned and operated by business valuation professionals. Unless otherwise noted, all webinars are targeted at an intermediate program level, qualify for two hours of CPE credit, and begin at 1:00 p.m. ET. The fee of $199 allows everyone in your office to participate including your remote offices and those who might be working from home . An unlimited number of employees at your firm can participate and earn CPE credit at no extra charge. Each attendee receives valuable handouts prior to the webinar. Following the webinar attendees will receive a webinar transcript along with an Adobe “movie” of the webinar showing the audio synced to the slide presentation in real time. More information on the VPS/FCG StraightTalk webinar series can be found at www.gofcg.net/vps.