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Differing Stock Option Viewpoints

Like many Family Law issues, there are differing viewpoints on how to value stock options. With such local emphasis on incentive stock options as part of compensation and the nature of the companies doing work in the Bay Area, valuing stock options incident to a marital dissolution is a common project. Certainly, most practitioners are aware of the concepts of Nelson and Hug. In Nelson, the number of stock options allocated to the marital community is based upon the fractio

Effective Buy-Sell Agreement

In an interesting recent engagement, corporate counsel for a large Northern California printer engaged us to perform the work required by an innovative and effective Buy-Sell Agreement. Negotiated over ten years ago, the Buy-Sell Agreement required the company to hire two independent appraisers to provide an opinion as to the fair market value of a 50% interest (there were two equal shareholders) in the common stock of the company. The Buy-Sell Agreement contained actual co

Contested Family Law Matters

As court-appointed experts, we have recently testified on some basic California Family Law principles: Value at Date of Trial vs. Date of Separation An “old” issue, in the instant case the company provided environmental clean-up services and employed a workforce of about 40. Just because the company provides services does not mean that the business should be valued at the date of separation. The subject company also had a significant investment in capital equipment. While

The Interim and Part Time CFO

Messrs. Eggers and Laversin are often asked to provide senior financial management assistance to companies in need of temporary assistance with special problems. ABA works with businesses to assist with turnaround situations, cash flow improvement, creditor workouts, interim CFO requirements and business financing. We assist companies that are experiencing financial distress by providing a variety of needs including, financial re-engineering and cash flow and profit improveme

The Properly Documented Purchase Price Allocation

As now required by ASC 805, we were recently engaged to assist a Silicon Valley-based company to first directly value the purchased intangible assets and then assist corporate accounting in allocating the purchase price. It is no longer acceptable to bunch the excess purchase price over book value and simply title the “bundle” as goodwill. Rather, accounting principles require that intangible assets be separately identified and discretely valued. We have identified and valued

Dueling Appraisers

We have been involved in dozens of disputes in which each side retained a business appraiser, and the two resulting opinions differed sufficiently that no negotiated settlement was immediately feasible. Some of these cases involved actual litigation, some involved arbitration or mediation, and others were handled outside of these processes. Through long experience with such situations, we have found that the best practice is for each appraiser to receive and have the opport

Transaction Advisory Services

Professional standards present a clear distinction in our work and the expression of our estimates of value as (1) calculations, (2) within a scope restricted report, (3) within a full self-contained report and (4) in a review report. In many cases, potential clients come to us asking us to appraise their business. In fact, what they really want is a set of calculations (usually presented within a range) and someone to represent them in negotiations with the buyer. As extensi

The Well-Reasoned and Documented Opinion

In a recent case, we were deposed presenting what opposing counsel later termed “a well-reasoned report” that assisted the litigating parties and counsel to reach a pre-trial settlement. In the instant case, we estimated a range of damages to a plaintiff resulting from a contract dispute with the other shareholder. We used extensive Internet and literature research to support our reasonable assumptions independently. In a second case, we participated in a twelve-hour mediatio

The Properly Planned Family Limited Partnership

A significant part of our practice addresses the value of minority limited partnership interests. Properly planned with an appropriate business purpose and by skilled legal counsel, a family limited partnership can provide a vehicle for family asset management and estate tax minimization. In two recent cases, we valued non-marketable limited partnership or limited liability corporation interests with specific reference to the actual facts and circumstances of the partnership

The Provisional Director

In many cases, deadlocked and disputing equal shareholders turn to the courts for dispute resolution and assistance. In three different cases (2001-2003) we have been appointed and approved by the court and shareholders to serve as a Provisional Director pursuant to CCC Sections 2001 and 204. In fact, it has been our experience to date that this process is “better” than a 3rd-party receivership or the stalemate that has resulted from the shareholder dispute / differences in o

A Qualified Second Opinion

We were recently contacted by counsel and the local Superior Court in two different cases to review the report and valuation calculations of another appraiser. Regretfully, in both instances, neither appraisal report conformed to the Uniform Standards of Professional Appraisal Practice (USPAP) and was not prepared by certified or credentialed appraisers. While it is not a given that a credentialed appraiser will provide an appropriate opinion and also not a certainty that a

The Wrong Appraisal Assignment

Two equal shareholders had been directed by the court to value their equity interest in a regular “C” corporation. The subject corporation was a General Partner in a venture (partnership) to build a series of tract homes. Excellent detailed records of costs incurred and projected future costs were available. The only real variable was the anticipated selling price of each unit and the “absorption rate” (the number of units sold each month). The opposing appraisal expert value

The Right Deduction

Just before the deadline to file his annual tax return, a client and his accountant called us to assist in what they thought would be an easy problem to solve. After all, in November 1997, the client (the sole owner of all 600 outstanding common shares of the subject company) had entered first into a Letter of Intent, then Definitive Agreements to sell his company for $95.0 million. The transaction was to close on March 1, 1998. In the stock transaction, the buyer and sell

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