“Insights on Valuation”

The latest issue of our “Insights on Valuation” newsletter is now available. Arxis Financial, Inc. is pleased to provide this highly respected, nationwide publication which features valuable information that is applicable to many litigation matters. Topics in this issue include:

  • Standards of Value – Legal Definition — The standard of value is an assumption, or set of assumptions, as to the specific characteristics of a buyer and seller (either hypothetical or actual) in a given set of circumstances surrounding a particular transaction (or assumed transaction). It is extremely important, in a legal setting, that a specific standard of value be determined as there is a potential for significant differences in an estimate of value based on different standards of value, or to put it another way, the different characteristics, or expectations, of different types of buyers and sellers …

  • “Double Dipping” in Divorce Matters — Double dipping arises when the cash flow of a closely held business is allocated between the in-spouse’s salary and dividends while alimony is awarded to the out-spouse based on total cash flow, not just the salary portion. When this happens, the cash flow apportioned to dividends is counted twice-once when it is capitalized into the value of the business, and a second time when it is treated as a source of income for determining alimony. Generally, double dipping occurs when compensation is normalized to value the in-spouse’s business, but his or her excess compensation over a fair market wage is not normalized to establish alimony …
  • Breach of Contract — The calculation of damages from the breach of a contract involves the analysis of historical financial data, analysis of the current status of the parties involved, and projections of future economic activity. In most breach cases, there is a basic formula used to calculate damages. In simple terms, the difference between what would have happened without the breach of contract and what did happen as a result of the breach of contract is the economic damage. Quantifying that difference is based on a combination of actual verifiable data, assumptions, and projections. There are three phases of most damage calculations …