Meet the Team – Karolina Calhoun, CPA/ABV/CFF

In each “Meet the Team” segment, we highlight a different professional on our Family Law team. This segment we highlight Karolina Calhoun, CPA/ABV/CFF. Karolina is a Vice President here at Mercer and is active in family law litigation and corporate valuation.

Understand the Income Approach in a Business Valuation

In this article, we’ll be presenting a broad overview of the income approach.  The final approach, the asset-based approach, will discussed in a future article.  While each approach should be considered, the approach(es) ultimately relied upon will depend on the unique facts and circumstances of each situation. 

Meet the Team – Scott A. Womack, ASA, MAFF

In each “Meet the Team” segment, we highlight a different professional on our Family Law team. This segment we highlight Scott Womack, ASA, MAFF. Scott is a Senior Vice President here at Mercer and is active in family law litigation and corporate valuation. Scott also leads our Auto Dealership Industry team.

Understand the Discount Rate Used in a Business Valuation

The discount rate is the key factor in business valuation that converts future dollars into present value as of the valuation date. In this article, we examine the various components of a discount rate.  Then, we relate the discount rate to rates of return of other investments that should provide a commonsense road map for what is reasonable and what is not.

Personal Goodwill: An Illustrative Example of an Auto Dealership

Personal goodwill was an issue in several of our recent litigated divorce engagements. It is more prevalent in certain industries than others and varies from matter to matter. However, although there are several accepted methodologies to determine personal goodwill, there is not a textbook that discusses where it exists and where it doesn’t. Before any attempts to measure and quantify it, an important question to ask is “Does it exist?” Often with ambiguous concepts like personal goodwill, the adage “you know it when you see it” is most appropriate. In this article, we examine personal and enterprise goodwill using a specific fact pattern unique to the auto dealership industry. Beyond this illustrative example, the analyses can be applied in other industries, but must be considered carefully for the unique facts and circumstances of each matter.

The Importance of the Valuation Date in Divorce

The valuation date represents the point in time at which the business, or business interest(s), is being valued. Understanding the valuation date of an asset valuation, such as a privately held business, for marital dissolution is an important consideration, especially for matters which have extended over a lengthy time and those that may be impacted by significant global events such as COVID-19. An accurate and timely valuation should consider current conditions and future expectations.

Valuation of Stock Options for Marital Dissolution

The valuation of stock options is a complex issue that divorcing parties may face during the determination and division of property. Designed to both reward performance and retain employees, these benefits can be difficult to value, particularly at a random moment for the purpose of marital dissolution.

Why Involve a Financial Expert in Divorce Mediations

Most family law cases settle at mediation or prior to trial. For example, Tennessee requires that parties must attempt to settle their cases at mediation prior to granting a trial date. Considering both of these facts, when should a family law attorney involve a financial expert in divorce mediations?

Lessons from Recent Engagements

In our family law practice, we serve as valuation and financial forensic expert witnesses. There is typically another valuation expert on “the other side.” In several recent engagements, the following topics, posed as questions here, were raised as points of contention. We present them here to help the reader, whether you are a family law attorney or a party to a divorce, understand certain valuation-related issues that may be raised in your matter. 

Valuation Assumptions Influence Valuation Conclusions: How to Understand the Reasonableness of Individual Assumptions and Conclusions

What is a client, attorney, or judge to think when significantly different valuation conclusions are present? The answer to the reasonableness of one or both conclusions lies in the reasonableness of the appraisers’ assumptions. However, valuation is more than “proving” that each and every assumption is reasonable. Valuation also involves proving the overall reasonableness of an appraiser’s conclusion.

2019 AAML/BVR National Divorce Conference Recap

On May 8-10, 2019, Mercer Capital attended the 2019 AAML/BVR National Divorce Conference in Las Vegas. This was the first biannual National Divorce Conference on cutting edge tax, valuation, and financial issues co-sponsored by the American Academy of Matrimonial Lawyers and Business Valuation Resources, LLC. We have chosen four sessions that we thought would be of interest.

What Is a Lifestyle Analysis and Why Is it Important?

A lifestyle analysis is an analysis of each party’s sources of income and expenses. It is used in the divorce process to demonstrate the standard of living during the marriage and to determine the living expenses and spending habits of each spouse. This article explores the various aspects including factors considered and sources of financial information used in the analysis. Additionally, we outline the process of building the analysis.

6 Ways to Look at a Business

How does a business owner evaluate their business? And how can advisers or formal business valuations assist owners examining their businesses? There are at least six ways and they are important, regardless of the size of the business. All six of these should be contemplated within a formal business valuation.

How to Determine Whether an Asset and Its Appreciation is Marital or Separate Property

Under Tennessee law, marital property is subject to property division and separate property is excluded from property division in a divorce. The underlying factor in this distinction is whether the increase in value between the date of marriage and the date of divorce resulted from efforts by a spouse, known as active appreciation, or from external (economic, market, industry) forces, known as passive appreciation. While these concepts seem simple, the classifications are only part of the story.

Changing Tides on Lack of Marketability in Tennessee Courts

For years, cases such as Bertuca and Barnes governed the landscape on the issue of marketability in the valuation of marital assets in Tennessee family law cases. So what has changed now? In this post, we discuss recent changes by Tennessee legislature that amends the Tennessee Code Annotated Title 36, Chapter 4.

Valuation of a Business for Divorce: Overview of Valuation Approaches, Normalizing Adjustments, and Potential Need for Forensics Services

Valuation of a business can be a complex process requiring certified business valuation and forensic accounting professionals. Valuations of a closely held business in the context of a divorce are typically multifaceted and may require forensic investigative scrutiny for irregularities in the financials that may insinuate dissipation of business/marital property. Business valuations are a vital element of the marital dissolution process as the value of a business, or interests in a business, impact the marital balance sheet and the subsequent allocation/distribution of marital assets.

The Important Role of Personal Financial Statements in Divorce

High dollar, contested divorce litigation engagements often involve complex financial issues.  In turn, those financial issues usually include business valuations and voluminous amounts of documents and financial information.  How does an attorney or business appraiser determine what is crucial to the case and what is trivial or secondary information?  One such piece of financial information that varies wildly in its interpretation and importance to the case is a personal financial statement.