Standards of Value Used in Colorado Divorce Cases
Typically, the standard of value used to value a business for divorce purposes is either:
Colorado statutes 14-10-113, on disposition of property, do not define a standard of value to be used in valuing a closely held business. Two court of appeals cases do give guidance in valuing goodwill in a closely held business.
In re the Marriage of Martin, 1985, the court tells us, "the value of goodwill is not necessarily dependent upon what a willing buyer would pay for such goodwill: rather, the important consideration is whether the business has a value to the spouse over and above the tangible assets".
In re the Marriage of Graff, 1994, the court reaffirms Martin as it
relates to the value of goodwill as "not necessarily dependent" upon what
a willing buyer would pay for such goodwill but what the goodwill is worth
to the spouse.
What does all this mean?
In my layman's opinion, the appeals courts language "not necessarily
dependent upon" means the trial court can choose to adopt either the fair
market value standard or the investment value standard for valuing goodwill.
How will the courts rule on other potential valuation theory differences between the two standards of value, including capitalization rates, minority discounts, and marketability discounts?
How can the valuation expert know and quantify how the value to a specific spouse differs from the value to a hypothetical buyer?
How Do You Properly Threaten Someone?Mediation/Negotiation
Contrary to the above title, I do not advocate threatening people in
a negotiation. However, as they say, there is a time and place for everything.
the years, I have had the opportunity to witness many threats during the
negotiating process. More times than not, the threats were not as effective
as they could have been.
R. Fisher in his book, International Conflict for Beginners, gives
us a somewhat Machiavellian, but nonetheless useful checklist of elements
of a well thought out threat. He says that if a threat is to be made, and
if it is to be framed explicitly, the party making the threat should be
I think if negotiators would test their threats against the above checklist, there would be fewer but more effective threats made.