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The Matrimonial StrategistLJN NewslettersNewsSections

Appraisal Economics

By Robert E. Schlegel
January 03, 2006

The subject of “discounts” is the most contentious issue in business valuation and property valuation today. In marital property division, the relative high or low values of the individual properties balance against each other as the parties settle (and squabble over) the allocation of assets. For example, it is common to see the husband (assumed to be the in-spouse, or business owner) argue for a “low” value for the business, whereas the wife (assumed to be the out-spouse, who will not take the business asset) would argue for a “high” business value. Discounts from a total property value (or, a proportionate ownership per share value) seemingly lower value in an arbitrary manner, usually spurring a nasty and expensive fight with dueling appraisers.

Application of a “Blockage Discount” is a valuation procedure grounded in simple supply and demand economics. It is being used with increasing frequency to value various types of property. Matrimonial attorneys need to know what this special kind of discount really means, how to ask for one when the facts and circumstances demand it, and how to attack an unsophisticated appraiser who carelessly employs or ignores it.

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