Income Approach in Divorce Valuations: Look Back or Leap Forward?

Business litigation and family law partner Drew Soshnick authored an article for Indiana Lawyer titled “Income Approach in Divorce Valuations: Look Back or Leap Forward?” that discusses how Indiana has responded to the development of definitions, premises and standards of valuing businesses and professional practices in divorce cases.

In the article, Soshnick defines terms that help provide an understanding to the income approach to valuation. He notes that valuation professionals in Indiana divorce cases must consider three valuation approaches: asset, income and market.

Soshnick provides examples of two methods – capitalization of earnings (CE) method and discounted cash flow (DCF) method – that convert anticipated economic benefits into a present single amount. He explains that when the income approach is applied in divorce valuations, the CE method generally is favored over the DCF method.

The full article is available for Indiana Lawyer subscribers.