When clients wish to perform estate planning or dissolve a marriage, attorneys with extensive experience in taxation and valuation often are asked to make determinations about the value of assets. Valuation experts must fully understand the complex structures of different financial vehicles to arrive at a defensible valuation amount.
Valuating a private equity fund is a little different than valuating a business. For instance, comprehensive market data usually is not available for private fund management companies, so the market-based valuation approach does not provide enough information in these cases. The asset approach to valuation also does not provide reliable information on private equity funds, since it typically sets the value too low by not accounting for the fund’s potential. Therefore, the income approach to valuation generally is the preferred method for assessing the value of a private equity fund since it accounts for the income-producing capabilities of the fund.
About the Author
With over 20 years of experience in international and domestic taxation, Suzanne DeWitt manages DeWitt PLLC, a private law practice in Miami. Attorney DeWitt assists multinational corporations and high net worth families with cross-border taxation issues and valuation services.