August 1997

Business Valuation

Buying a Business - Caveat Emptor

Quite often I am asked to advise prospective business purchasers in analyzing the worth of a business. The process usually starts by reviewing a financial package put together by a business broker. Perhaps the most important and most difficult task is to estimate the future economic income that the business will generate for the new owner. Future income is usually estimated by analyzing historical earnings for a number of years. Over the years, I have noticed a pattern of techniques used by sellers to inflate historical earnings and thus inflate the purchase price of the business. Some of the more common techniques are as follows:

Prospective purchasers encountering any of these claims should proceed with caution.

Litigation Services

Welcome to the Roaring Fork Valley, Embezzlement Capital of Colorado!

Is it just me, or does it seem like every time you pick up the newspaper you read that another valley employee is arrested for embezzling from their employer?

What should you do , as an attorney, if your business owner client tells you they think an employee is stealing from them? A good first step would be to meet with the client and an accounting consultant to discuss conducting a fraud investigation and what the primary objectives of the investigation should be. The objectives should include some or all of the following:


Deadlock - Part I

Webster's Dictionary defines deadlock as "a standstill resulting from the action of equal and opposed forces". It's often necessary for mediators, attorneys and other advisors to help negotiating parties get past deadlocks. In this month's and next month's Dispute Resolution Counselor we will look at strategies to overcome deadlock. The following techniques may be helpful in breaking a deadlock:

  • Valuation Report Critiques
  • Business Valuations 
  • Financial Litigation Support 
  • Expert Witness Services 
  • Mediation of Financial Disputes 
  • Employee Fraud 
  • Buy/Sell Formulas
  • Court Appointed Special Master
  • Court Appointed Receiver
  • Economic Loss Analysis
  • Gift & Estate Valuations 
  • Financial Issues in Divorce