Valuation of a Motel – Family Law

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We were engaged to assist in a Family Law case for a couple whom had divorced and were seeking to fairly split the assets of the marriage.  During their marriage they had acquired a motel, in which one of the partners wished to keep.  Rather than selling the motel we were engaged to value the asset/lease for a fair market value.  As with most family law cases, we were engaged independently as such both parties signed off on a Letter of Engagement outlining our roles and what would be included in the investigation.  Both parties were given an opportunity to express their views in the case.

The most challenging issue in this case was the fact that the motel had only recently been acquired therefore the official financial statements had only one full year of records that did not include income and expenses from a previous business.  We were able to work around this by reviewing occupancy rates, room rates and comparing with other motel businesses.  We also held discussions with professional Business Brokers whom specialise in Motel Sales to assess their opinion on value.

Upon concluding this case, the Motel was still undergoing a refurbishment and due to the lack of independent financials, it was in our view, the motel was not prepped for sale.  Our instructions were to assess the business at a date, and thus these factors had to come into consideration when determining a figure.