Managers and investors alike must understand that accounting numbers are the beginning, not the end, of business valuation.
–Warren Buffet
It may come as a shock to some clients to learn that there may be two or more definitions of value for the same property at the same time.
–Shannon Pratt

The second edition of The Lawyer’s Business Valuation Handbook is here! While it’s been updated and expanded to 133% of its original size, the book remains a concise, easy-to-use reference for divorce and family lawyers with practical explanations that help you understand and evaluate expert reports. This one-volume, 625-page resource on business valuations pays for itself. For a rather small investment, this handbook will help you understand business valuation and will make your discovery, your divorce and family law depositions, and your case presentations (such as for collaborative divorce and child custody) much more focused, efficient, and effective.

Shannon Pratt, one of the most well-known authorities on the subject of business valuations, published the first edition of this handbook for divorce and family law attorneys in 2000. This second edition (with Alina Niculita as co-author and several contributors) improves upon the first, giving child support lawyers a practical work that is thorough, balanced, and well organized.

The subtitle for the handbook remains “Understanding Financial Statements, Appraisal Reports and Expert Testimony,” and the handbook certainly covers that ground. As stated in the Preface, “[t]his book is for [divorce and family] lawyers who frequently, occasionally, or even for the first time encounter disputed (or potentially disputed) business valuation issues. It serves all of the above because it is written and organized both as a tutorial and as a reference manual.”


The handbook begins with discussions of defining value in the relevant context and of the levels and premises of value (22 pages). It moves through important concepts such as business valuation approaches, methods, and procedures, financial statement terminology, the income approach, the market approach, the asset-based approach, the excess earnings method and rules of thumb (114 pages), which is valuable information for the divorce and family attorney to have.

The middle of the book covers a wide variety of topics. It covers concepts such as personal versus enterprise goodwill, reasonable compensation, adjustments, comparative analysis, economic and industry analysis, discounts and premiums, and reconciliation of value indications (110 pages), all of which can be applied to divorce law and family law.

Chapter 19 delves into valuations in the context of marital dissolution. The chapter covers standard of value, premise of value, appreciation (active versus passive), valuation date, goodwill, buy-sell agreements, covenants not to compete, minority and marketability discounts, trapped-in capital gains taxes, and “double-dipping.” There are similarly detailed chapters devoted to federal tax matters, shareholder and partner disputes, financial reporting, ESOPs, professional practices and small service businesses, and S corporations (142 pages). If you own your own divorce law firm or family law firm, this is vital information.

The next part of the handbook is devoted to valuation reports. There are two chapters that cover the components of an appraisal report and a checklist to assist in your review of the report, including the subject of credentials (40 pages).

The last part of the book addresses the admissibility of business valuation evidence, discovery, buy-sell agreements, ADR, standards and credentials, and cross-examination of the expert (120 pages), which is pertinent to divorce and family law cases that make it to trial. There are appendices with a glossary, listing of professional organizations, bibliography, table of cases and an index (74 pages).

Overall, you will learn how to evaluate business valuations and how to find the issues worth pursuing in your divorce law firm. Pratt and Niculita’s pragmatic approach makes difficult subjects understandable for all divorce law and family lawyers. The approach allows you to delve deeper into critical areas of inquiry without having a doctorate in business administration. And the approach will guide you so you can guide—and best serve—your divorce clients and child custody clients.

The Lawyer’s Business Valuation Handbook will not qualify you as an appraisal expert. It will not replace the need for you to hire a knowledgeable and qualified expert to assist you with divorce law firm cases. But it will make your efforts relating to business valuations more productive in all your family law cases. You will learn to focus your discussions with experts and to reach a common understanding of the respective positions when discussing substantive matters of approach, method and procedures. These benefits make the book well-worth its price, a practical and useful work to be decorated with your own highlighting, margin commentary, and Post-It Notes, which should be an integral part to your divorce and family law practice.

Shannon Pratt and Alina V. Niculita, The Lawyer’s Business Valuation Handbook: Understanding Financial Statements, Appraisal Reports, and Expert Testimony (2d ed. 2010, American Bar Association). $149.95.