Parties divorce. Their wife appealed to a number of issues. One of them is the valuation of the husband’s share in a corporation. The Appellate Court did not agree with the Wife’s arguments for the valuation.
The wife’s expert, Lipman, testified that the capitalization of excess earnings method is generally employed in divorce cases. He wrote a valuation report. He stated that the capitalization of excess earnings method “follows the method outlined in Revenue Rule 59–60 prescribed by the Internal Revenue Service and its amendments.”
He was specifically asked if he used Revenue Rules 59–60 and 68–609 in this case. He answered, “that’s correct.” On cross-examination, however, he admitted that he followed only part of the formula written in the above rules. He said that he omitted other steps of the formula.
Husband’s expert, Walker, followed the formula written in the above rules precisely when appraising the husband’s share in the corporation. Walker considered the fact that the company was a closely held corporation. That husband was a minority shareholder. That the shares were subject to a shareholders’ agreement. And that there was no client loyalty to a particular person in the husband’s business.
That had a negative effect on the marketability and value of the shares in question. He used all of the figures from the business’ balance sheets. He valued his husband’s interest in the corporation at $339,000. On cross-examination, Lipman admitted that his conclusion about client loyalty was a mere assumption.
The trial court accepted Walker’s appraisal of the husband’s share in the corporation. It awarded a one-half interest in the husband’s holdings in the corporation. With a floor of $169,500, or one-half of the shareholders’ agreement buyout price.
The trial court accepted Walker’s appraisal of the assets in question. The award to the wife on the basis of said appraisal was not an abuse of discretion. We cannot say that no reasonable man would have resolved the issue in the same manner.
IRMO Puls, 268 Ill.App.3d 882.
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