For more than 20 years, most lawyers and business valuation experts in New Jersey have assumed that the standard for valuing a minority interest in a closely held business for equitable distribution purposes was fair market value with a discount for lack of control. This assumption � never clearly stated as black letter law in any case in this state � may have to be revisited as a result of a recent Appellate Division decision.
The valuation process normally involves determining the price at which the business interest would sell in a transaction involving a hypothetical willing buyer and willing seller, each with reasonable knowledge of the marketplace, and neither under any compulsion to sell or buy. Any appropriate minority interest discount is taken at this point.
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