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.

Observations of New Tax Reform Law on Personal Goodwill in Family Law Cases

Most professionals have seen countless reports of the 2017 Tax Cuts & Jobs Act (TCJA) on national news and been bombarded with requests to discuss the impact and various changes in the new law.  For the family law community, obvious takeaways are the change in the deductibility, or lack thereof, in alimony payments after 2018, elimination of personal exemptions, and expanded use of 529 plans to include secondary and lower-level education expenses.  Can a provision in the TCJA actually provide some insight into the presence of personal goodwill?

Personal Goodwill Can Have a Big Impact on Fair Market Value

When WADL-TV 38 founder Franklin Z. Adell died, he left behind what would prove to be a complex estate. This is a bellwether case on personal goodwill and its impact on fair market value of a business. Is it worth $92 million dollars like the IRS’ initial estimate or $4.3 million dollars liquidation value as opined to in the estate’s second valuation?

10 Ideas for Experts When Preparing for Depositions

An expert deposition is a formal proceeding. In this article, Chris Mercer presents a list of deposition preparation items from his experience both in having his deposition taken and in attending a number of depositions of other experts or parties to various matters.

Wisniewski v. Walsh and the Bad Behavior (Marketability) Discount in New Jersey

In this article, Chris Mercer addresses a case with the application of a 25% marketability discount in a statutory fair value determination. The New Jersey Appellate Division issued an unpublished decision in Wisniewski v. Walsh, 2015 N.J. Super. Unpub. LEXIS 3001 [App. Div. Dec. 24, 2015]. The case is interesting in that it attempts to determine a marketability discount in relationship to the “bad behavior” of a selling shareholder.

New York’s Largest Corporate Dissolution Case: AriZona Iced Tea

After several years of litigation involving a number of hearings and trials on various issues, a trial to conclude the collective fair value of a group of related companies known as the AriZona Entities occurred. This article presents an in-depth discussion of the case and the valuation issues present.

New York Statutory Fair Value: Matter of Giaimo

An epic corporate governance and stock valuation battle between rival siblings, fighting over a Manhattan real estate portfolio worth upwards of $100 million, generated an important ruling last week by New York County Supreme Court Justice Marcy S. Friedman.

Customary and Not-So-Customary Services in the Litigation Arena

This article relates our experience in the litigation support arena and highlights not only those services well known to attorneys, but other services that business valuation professionals can provide with which some attorneys may not be as familiar.

Good Things Come to Those Who Don’t Wait

Having been retained for a number of significant litigation engagements over the years, Mercer Capital has had the opportunity to observe a variety of theories on the best time for attorneys to retain experts for their lawsuits.

Mediation As an Alternative to Litigation

Will the number of cases appearing before probate judges increase dramatically in the next several years – specifically estate and trust disputes as well as fiduciary cases?

Damages in Breach of Contract Cases

Damages calculations in breach of contract cases are nothing more than an attempt to determine the amount of money that will make a plaintiff “whole” after suffering some alleged wrongdoing (breach of contract) at the hands of a defendant. In general, this means calculating the present value of the lost profits of the plaintiff caused by the alleged breach of contract.