Someone will say, “You know, we could just use the company accountant and they should be able to give us a ballpark idea of what the business is worth.” That’s usually really a bad idea. The business accountant is certainly skilled in terms of preparing financial statements, skilled in terms of preparing the tax returns for the business enterprise, but generally accountants are not equipped to do that kind of valuation work. It takes additional skill and training to be able to do valuations, and it’s important to both sides to have someone who doesn’t have any stake in the outcome, someone who doesn’t have a horse in the contest and have a need to protect the accuracy of the financial statements that have been generated.
A business valuation, when it’s done correctly, is going to cost some money. It doesn’t necessarily have to cost an outlandish amount, but generally speaking, it’s a good investment for both sides to have an outside business valuation expert review the documents, conduct the management interview, and formulate opinions of value that will be acceptable to the court that don’t have any kind of contamination from prior experiences with the business enterprise. In virtually every case where there is a significant business, clients are strongly encouraged to use outside business valuation experts.
Chuck Roberts is family lawyer at Momkus McCluskey Roberts, LLC, one of the largest law firms in DuPage County, Illinois.