February 1997

Business Valuation

Who decides which individuals are qualified to perform business valuations?

In the United States there are three organizations that presently accredit individuals in business valuation and one organization in the process of developing an accreditation program.

National Association of Certified Valuation Analysts. The professional designation of Certified Valuation Analyst is awarded to individuals who must:

• Be a Certified Public Accountant
• Be a member of the AICPA or state society of CPAs
• Be a member of NACVA
• Successfully complete a rigorous training and testing process

• Be a member of ASA
• Acquire five years of experience in business valuation
• Pass an examination and submit two business valuations

• Be a member of IBA
• Pass an examination and submit two business valuations

These designations are important to the users of business valuation reports because they show a substantial commitment by the designated parties to the discipline of business valuation.
 

Litigation Services

Premarital agreements theoretically should make property settlements simpler and more predictable. Having said that, I will tell you that the two largest divorce cases (in terms of professional fees) that I ever worked on involved premarital agreements.

A poorly drafted premarital agreement can often complicate a property settlement and add a greater degree of uncertainty than would exist without an agreement. A premarital agreement is essentially a financial contract just like any other partnership agreement and should be drafted with an understanding of the client's financial situation including:

• The overall financial condition of the parties
• Specific separate assets to be preserved
• How income during the marriage will be generated
• How expenditures during the marriage will be accounted for
• How to preserve separate assets as they increase and decrease in value, are traded, sold, and reinvested
• How sources of income are likely to change over the life of the marriage
• What records will be available to monitor amounts due under the agreement
• The client's understanding of how the agreement will affect future financial decisions
• How debts incurred during the marriage are to be allocated

Mediation

On Dragnet, one of my favorite childhood TV programs, Sgt. Joe Friday was famous for saying, " just the facts ma'am". Parties to financial disputes often need more than just the facts to reach a satisfactory agreement. Mediation theory teaches us that disputants need satisfaction in three areas in order to resolve their disputes.

1. Procedural issues. The way the dispute is to be resolved
2. Psychological issues. Perceptions of trust, fairness, and respect
3. Substantive issues. Money, physical resources or "just the facts", as Sgt. Friday would say