In most cases, a business valuation that is conducted for the purpose of a divorce is used in court proceedings. In such cases, the date of the valuation may seem like an insignificant point but in fact it is one of the most important.
Divorce proceedings generally take a considerable amount of time to conclude, usually at least a year long and can take several years too. The date of valuation then becomes important for the simple reason that the valuation of a business done at the beginning may not be accurate anymore on the hearing date.
We have been recommended by legal experts in Asia that it is advisable to conduct the valuation as close to the hearing date as possible to achieve accuracy.
For example, in one divorce case, the husband and wife engaged their own independent valuer of a business. The husband’s valuer conducted the valuation at the time the wife resigned from the company to arrive at a valuation figure of $500,000 (figure altered). The wife’s valuer had her valuation conducted at the date nearer to the hearing date with a valuation figure of $1,500,000 (figure altered). In this case, the court accepted the latter valuation.
Hence as a general rule of thumb, have the valuation date to be conducted as close to the hearing date as possible.
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