INSIGHTS

Home » Litigated Business Valuation Services

Litigated Business Valuation Services
Working Capital Changes in a Free Cash Flow Forecast– Part II

Working Capital Changes in a Free Cash Flow Forecast– Part II

Part I of my working capital related blog addressed the impact on free cash flow of changes in current assets and changes in current liabilities, which are the two components that comprise working capital (calculated as current assets minus current liabilities). The combined impact of changes in current assets and changes in current liabilities equals the impact of changes in working capital on free cash flow. Part II of this blog identifies methods often used by business appraisers when forecasting working capital.

read more
Capital Expenditures, Depreciation and Amortization in a Cash Flow Forecast

Capital Expenditures, Depreciation and Amortization in a Cash Flow Forecast

When valuing a private operating company, an appraiser is likely to use an income approach, either as the main valuation method or in conjunction with another method. Whether the appraiser capitalizes cash flows in a capitalized cash flow (“CCF”) model or uses forecasts of future cash flows in a discounted cash flow (“DCF”) model, they have incorporated both explicit and implicit assumptions into the cash flows used in their model.

read more
Analyzing Assumptions in a Cash Flow Forecast

Analyzing Assumptions in a Cash Flow Forecast

Forecasts of future cash flows within the income approach to business valuation are loaded with assumptions. During my nearly two decades of business valuation experience, I have reviewed hundreds of valuation reports prepared by other experts that serve as a constant reminder that mathematical accuracy does not always equate to a reasonable value. I have seen erroneous assumptions made by business appraisers that range from illogical disconnects within the valuation to outright errors or unsubstantiated speculation. 

read more
Adding the Value: Business Valuation Expertise in Divorce Litigation – Part Two

Adding the Value: Business Valuation Expertise in Divorce Litigation – Part Two

In my last blog post, I explained what an active/passive appreciation study is, scenarios in which it would be conducted and the value that a business valuation expert brings to the table when performing the analysis. As a refresher, an active/passive appreciation study is often required in matrimonial litigation when an existing business or business interest is owned by one spouse prior to the marriage, or is gifted or bequeathed to one spouse during the marriage. Since we have covered the basics, we can now dive deeper and discuss the various phases and steps of an active/passive appreciation study.

read more
Adding the Value: Business Valuation Expertise in Divorce Litigation

Adding the Value: Business Valuation Expertise in Divorce Litigation

When going through a divorce, determining the marital value of private business interests can often get tricky – this is especially true if one spouse has a separate ownership interest in a business. An active/passive appreciation study is often required in matrimonial litigation when an existing business or business interest is owned by one spouse prior to the marriage, or is gifted or bequeathed to one spouse during the marriage.

read more
Pre-divorce Business Downturn Syndrome

Pre-divorce Business Downturn Syndrome

Reflecting back on the performance of more than 1,000 business valuations over the last 20-plus years, I have observed the regular occurrence of an economic event in many divorce-related engagements that I have named the Pre-divorce Business Downturn Syndrome (“PBDS” for short).

read more