How is the "value" of a business defined?
The term "value" means different things to different people. In the business valuation context, it means economic value. Economic value can also be defined in many ways including:
Fair market value. The price at which the property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having a reasonable knowledge of relevant facts. This is the most common standard of value.
Fair value. In most states, fair value is the statutory standard of value applicable in cases of dissenting shareholders' appraisal rights.
Premarital Agreements - Part 2Litigation Services
Last month we explored the need to acquire an in-depth understanding of the client's financial situation when drafting a premarital agreement. This month I will offer four suggestions to hopefully help you avoid problems I have witnessed in premarital agreement litigation.
Use concise accounting terminology. Ambiguous terms lead to multiple interpretations of agreements.
Define accounting terminology in the agreement. Defining major terms in the agreement is essential. Be specific when possible. Broader terms and principals of accounting should be defined as "in accordance with Generally Accepted Accounting Principals" or as defined in a specific Internal Revenue Code section.
Use examples in the agreement. This accomplishes two goals. First, by testing a comprehensive sample set of facts against the draft agreement, we see if the agreement produces the desired result. Second, during the divorce proceedings the examples will be invaluable in demonstrating and clarifying the parties' intent as evidenced by the agreement.
Set up a system to monitor the agreement. Most business people would not conduct a joint venture without an accounting system to monitor results. The same should be true in monitoring a premarital agreement.
In the final analysis, accountants and attorneys who team up to draft premarital agreements will be much more effective in the event that they meet again to prepare for trial.
Recognizing negotiating styles - Part 1
It is important for a Mediator to recognize the disputing parties' negotiating styles in order to help them reach agreements in financial disputes. This month we will take a look at the "positional bargainer".
Attitudes of positional bargainers