A client we’ll call Jason had a thriving company—and a rocky marriage. As things continued to crumble domestically, he knew his business would be a key factor in a potential divorce. He also knew divorce causes many businesses to fail. Despite such knowledge, Jason didn’t secure a valuation in the early days of his martial dissolution proceedings. In desperation, he turned to my company Sofer® Advisors for business valuation services. He needed help fast and our team moved Heaven and Earth to help him keep his business healthy.
But first, some context…
How much is my sheet metal business worth?
Jason’s company specializes in sheet metal and other fabricated products. It’s ironic he didn’t embrace the adage of “striking while the iron’s hot” which comes from the ancient form of his occupation: blacksmithing. Just as a blacksmith must shape iron while it’s glowing red from the forge, Jason should have sought a business valuation before his relationship reached the point of no return. Instead, it all played out very differently as you shall read.
Our involvement began with a call from a lawyer named Megan. The Sofer® Advisors team of business valuation experts has frequently teamed up with her in the past. And yet, Megan seemed nervous over the phone. “David,” she started. “Good news. I have a client that badly needs your help.”
“We could set something up for next week. How does our normal 30-day timeframe sound?” I asked.
That’s when she told me why she was nervous. “No. We need a valuation by end of day Monday. That’s not the worst part, either. I need you in court to testify Tuesday.”
I almost couldn’t reply. Megan’s a friend, but she’s not one to tease about client work. Still, I asked, “Is this a joke?”
It wasn’t. And she quickly filled me in on details. Her client Jason had just fired his lawyer and returned to her. (Megan had provided him a consultation months earlier. Back then she suggested an immediate business valuation be performed by Sofer Advisors.)
He declined, not wanting to spend more money on a valuation. And now? He was about to go to court in a divorce case that could destroy his business.
Sheet Metal Business Valuation
This would be a difficult challenge for the Sofer® team, but I also know if anyone could pull it off, we could.
On the bright side, the client didn’t need same day business valuation services. We had the luxury of two business days to finish the work. The central problem we faced with this valuation is that we had limited time to value a business that would normally require a month. As my team swung into action on Thursday gathering facts about Jason’s business, I set to work planning how we could make some magic happen.
Step one was to create more time for the valuation. Unfortunately, for our team, this meant everyone working shifts on Saturday and Sunday to turn two days into four. Next, my attention turned to how we could rush the valuation process without sacrificing the standard of quality Sofer® Advisors is known for. The answer? Taking a page out of Henry Ford’s book.
Ford pioneered the assembly line to mass produce cars, but Sofer® Advisors borrowed the concept to complete a business valuation in record time. Every team member pitched in with their individual specialty area, staggering the workload throughout the weekend so everyone could attend events they had already planned, including one wedding and two college football games.
By the end of Monday, the valuation was complete and in the hands of Jason and his capable lawyer Megan. Meanwhile, his soon-to-be ex-wife’s counsel had claimed an absurdly high valuation for the business with nothing substantive to back it up. Now Megan had a proper value, backed up by Sofer Advisors, to ensure a fair split of assets between parties. Despite an exhausting four-day grind, I prepared to testify in court on Tuesday.
I was just driving to the courthouse the next morning when Megan called me with even better news. When confronted with a fair business valuation from Sofer Advisors, Jason’s ex-wife immediately settled. Her lawyer didn’t have anything to back up his valuation, and knew they’d be crushed in court. Jason’s business was saved—only at a much higher cost than if he had acted earlier.
Business Valuation Divorce
An old rule of thumb that remains relevant in today’s economy goes: “Price. Quality. Speed. Choose any two.” While most businesses strive to provide all three to some degree, it is a balancing act. Jason needed Sofer Advisors’ level of quality and the speed his lawyer knew only we could provide. Still, this resulted in a fee much higher than normal. After all, our staff had to be compensated for the herculean task they completed over a single weekend!
Given the luxury of time, the fee would have been much lower, but Jason accepted the valuation cost in good humor. He knew it was worth it to save his business, and he enjoyed seeing his former wife’s attorney look like he “brought a knife to a bazooka fight” as he later told us.
When time is short due to circumstances ranging from a formal hearing to a buyout offer with a hard deadline—and everything in between—Sofer Advisors will pull out all the stops to ensure your business is properly valued by experts ready to help you achieve your goals. Whether you have months at hand or need immediate aid, it’s time to contact Sofer Advisors today. We would be happy to offer you a free consultation.
David Hern is the founder and chief executive officer of Sofer® Advisors, LLC focusing on business advisory services related to litigation assistance, estate and tax planning, and business enterprise valuations for various privately-held and public companies. He is a qualified financial analyst with a proven ability to simply and clearly communicate analysis to boards of directors, presidents and CEOs, CFOs, controllers and private equity portfolio managers. David has been recognized for enabling organizations to determine their enterprise and equity value for a variety of situations including strategic planning, sale or IPO, mergers and acquisitions, financial reporting (common stock, stock options grants, purchase price allocations, impairment analyses, etc.) and tax compliance (estate & gift, 409A, NUBIG). Industry experience includes, but is not limited to, professional services, business service, healthcare, information technology, financial services, and manufacturing & distribution.