For Experienced Sellers: Navigating Partnership Disputes -- Lessons from a Valuation Expert

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What impact can a partnership dispute have on the value of a company? What is the difference between a legal valuation and a market-based valuation for M&A purposes? Expert appraiser Andy Frew answers these questions and more as he discusses what’s involved and what can go wrong with valuations involving companies that have a partnership dispute arise. He covers the complexities of valuing partnership interests and establishing a thorough valuation methodology to prevent disputes from escalating.

What You’ll Learn

• Standards of Value: An explanation of the three types of standards of value – fair market value, investment value, and fair value – and when each is used. 
• Triggers: What can cause a partnership split or a dispute and the complexities involved in valuing minority interests in privately held businesses.
• Experience: The critical role of experience and credentials for appraisers, especially when their work may be challenged in court or by regulatory bodies like the IRS.
• Differences in Valuations: The distinction between valuations for legal purposes (e.g., partnership disputes, estate taxes) versus market-based valuations for M&A transactions.

Want More? Related Resources: 

• Business Valuation Standards of Value & Fair Market Value
• Business Valuation Basics: 9 Critical Concepts to Understand
• Business Valuation Checklist: 4 Questions to Ask First
• Business Valuation Checklist: 3 Traps to Avoid

Books Mentioned:

• Buy-Sell Agreements for Closely Held and Family Business Owners by Z. Christopher Mercer
• Quantifying Marketability Discounts by Z. Christopher Mercer
• Business Valuation: An Integrated Theory (Wiley Series in Finance) by Z. Christopher Mercer and Travis W. Harms
• Valuing a Business, 6th Edition: The Analysis and Appraisal of Closely Held Companies by Shannon P. Pratt and the ASA Educational Foundation
• Cost of Capital, + Website: Applications and Examples (Wiley Finance) by Shannon P. Pratt (Author), Roger J. Grabowski (Author), Richard A. Brealey (Foreword)
• 30-Second Economics by Donald Marron

Additional Resources:

• Planning to sell your business? Schedule a free consultation today.
• Download a free PDF copy of The Art of The Exit: The Complete Guide to Selling Your Business, Acquired: The Art of Selling a Business With $10 Million to $100 Million in Revenue, and Food and Beverage M&A: An Insider’s Guide to Selling a Food or Beverage Manufacturing, Distribution, or Grocery Business.
• Purchase your copy now of A Beginner’s Guide to Business Valuation | The Exit Strategy Handbook | Closing the Deal

Listen to Other Episodes

• M&A Valuations in the Real World with Abhi Mathews
• The Art and Science of Valuing a Middle-Market Business with Kevin Moyer and Megan Sartor
• What Does the Future Look Like for Middle Market Valuations? with Bill Wiersema