Does anyone have recent experience with law firm valuations? I’m seeing a couple of different formulas, ie Revenues X (.5 to 1.5) or Net Earnings X (2 to 3). Thoughts?

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From the divorce side, I've handled a few cases that involved partnership interest valuations. It, in part, depends on firm size. The smaller the firm, the better success I had arguing that the valuation multiples should be low, because it is less attractive/fungible. "The Law Offices of John Doe" has far less intangible value without John Doe than an AM Law 200 firm, without said partner. In one instance, I successfully argued, hard assets plus (what worked out to be just less than) 1.0 x net.

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Thanks

Recently did this. Was told the options were basically 3-4x net or 1.1.75 gross. We agreed to 1.5x gross

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Thank you.

Find an attorney/CPA team who can assist you with this. There are many, many different ways to value any business. Regardless of whether you are buying or selling it is something you want to make sure is properly analyzed for full transparency (as much as their can be) in the valuation process.

I’ve got nothing for you there, then. I don’t handle business valuations but occasionally have clients who need them for other work I assist with and the above is as far as I go.

Many people don’t realize the numbers can basically be made to show really different results depending on the approach you take.

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