Hugh v. Hugh the Appellate Court was asked to review the Trial Court’s value of the couple’s interest in a semi-conductor brokerage business. The bulk of the testimony came from husband and wife’s retained valuation expert. Basically, the husband testified the company had no inventory nor value. However, documentary evidence submitted by husband through financial statements, tax returns for 2011 and 2012 showed approximately one million in revenue and one hundred fifty thousand in losses. Husband claimed the dramatic reduction in income and the loss was due to the overall downturn in the economy particularly in the semi conductor industry. Wife’s expert a certified public accountant utilized the market approach in valuing the company as there was insufficient information to support a valuation using the income or asset approaches which are the two other generally accepted approaches to valuing a business. Wife’s expert after looking at thirty-one comparable companies determined that the company’s intrinsic value was approximately one point four million ($1.4) dollars. Although the trial court ruled there was insufficient evidence to value the company, the Virginia Court of Appeals disagreed and found “a relative wealth of information” that could have been utilized to value the business. The Appellate Court relied on the tax returns showing the company’s gross income to be sufficient a value a company and that the Trial Court had “more than gross income as evidence and discretion to place a value within the range provided with witness testimony and documentary evidence admitted by the Trial Court.” If you are faced with such a dilemma in a divorce where there is a marital business it is important to hire an experienced qualified expert to assist you in protecting that asset in addition to your divorce attorney. The valuation of a business or professional practice (medical office or law office) in the context of a dissolution proceeding requires lawyers and evaluation experts to consider variables unique to the context in which the valuation is taking place. Since the Judge is driven by the goal of substantial equity, each decision is made on the very specific facts which makes it difficult to predict certain regarding the ultimate valuation. Contact: Craig Simon at Simon Law, 480-745-2450]]>