When business owners in Illinois disagree about their company’s worth, they often turn to the courts for answers. The state has seen more valuation disputes in recent years, especially during business sales, mergers and divorces where a business is part of marital assets.
What is a business valuation dispute?
A business valuation dispute happens when two or more parties can’t agree on what a company is worth. This often occurs during shareholder buyouts or when someone wants to sell their stake in the business. Illinois courts look at three main ways to figure out a business’s value:
- Looking at what the business owns (asset approach)
- Comparing it to similar companies that sold recently (market approach)
- Checking how much money it makes (income approach)
The court picks the method that makes the most sense for each case.
How Illinois courts make valuation decisions
Illinois judges rely on expert witnesses to help them decide these cases. Here’s what they look at most often:
- Past business performance and profits
- Current market conditions
- Cash flow records
- Sales of similar companies
- Business risks and growth plans
These points help judges clearly assess the business’s current and potential worth.
Illinois courts often use “fair value” instead of “fair market value” when dealing with shareholder disputes. This means they won’t lower the price just because someone owns a more minor part of the business or the shares might be hard to sell.
Judges do more than pick a number between what different experts say. They check if the experts know what they’re discussing and if their methods make sense. They also make sure everything follows Illinois business laws.
Business valuation disputes need careful handling and solid proof to support claims about a company’s worth. If you’re facing a valuation dispute, working with an attorney who knows Illinois business law can help protect your interests and reach a fair outcome.
