IVS 104: Data and Inputs in Family Law Business Valuations
- DB Forensic
- Mar 18
- 3 min read
Updated: Apr 15
When a business valuation is prepared for a family law matter, the numbers presented in the report can significantly influence the outcome of a property settlement.
However, the valuation itself is only as reliable as the information used to produce it.
Financial statements, industry benchmarks, market transactions, and business forecasts all form part of the evidence used to determine value. If the wrong information is used, or if the data is unreliable, the final valuation may be challenged in court.
This is where International Valuation Standard IVS 104: Data and Inputs becomes important. It establishes clear principles for selecting and using the information that underpins a valuation.
Why Data Quality Matters in Business Valuations
IVS 104 focuses on the selection and use of data when determining the value of an asset or business interest.
In simple terms, data becomes inputs, and those inputs drive the calculations that produce the final valuation conclusion.
For example, when valuing a business in a family law dispute, a forensic accountant may rely on inputs such as:
historical financial performance
forecast earnings
industry profit margins
comparable business sales
market risk and discount rates
Each of these inputs must be carefully assessed. The valuation standard emphasises that valuers should maximise the use of observable market data, meaning information that reflects real transactions or market evidence.
Using reliable market evidence strengthens the credibility of the valuation and reduces the likelihood of disputes about assumptions.
Selecting Relevant Data
Not all information is equally useful in a valuation.
IVS 104 requires valuers to determine whether data is fit for purpose in the context of the asset being valued, the valuation method used, and the agreed scope of work.
Relevant data should ideally have four key characteristics:
Accuracy
The information should be free from bias or errors and reflect the true characteristics of the business.
Completeness
The dataset should be sufficient to properly analyse the business or asset being valued.
Timeliness
The data must reflect market conditions at the valuation date.
Transparency
The source of the information should be traceable and clearly documented.
In family law disputes, these principles help ensure that the valuation is based on credible and defensible financial evidence.
Professional Judgement and Assumptions
Even with strong data available, valuations still require professional judgement.
IVS 104 recognises that inputs are often derived from data combined with assumptions, adjustments, and analytical reasoning.
For example, a valuer may need to:
adjust financial statements to remove personal expenses
normalise earnings for unusual events
estimate future growth rates
determine appropriate discount rates
These decisions must be carefully justified because they directly influence the valuation outcome.
If the inputs cannot be supported with reasonable data or professional reasoning, the valuation may not comply with the international standards.
Documentation and Transparency
Another important aspect of IVS 104 is documentation.
The standard requires valuers to clearly explain the source, selection, and use of significant data and inputs used in the valuation.
This documentation allows others to understand:
where the data came from
why it was considered relevant
how it was applied in the valuation calculations
In family law matters, this transparency is critical because the valuation may be scrutinised by opposing experts, lawyers, and the court.
The Role of Forensic Accounting
In family law disputes involving businesses, selecting the right financial information is rarely straightforward.
Businesses may have incomplete records, unusual transactions, or financial adjustments that need to be analysed carefully. This is where forensic accountants play a key role.
DB Forensic assists lawyers and clients by:
analysing financial statements and management accounts
identifying reliable market and industry data
normalising earnings and removing non-business expenses
selecting appropriate valuation inputs
documenting the valuation process in expert reports
By applying the principles of IVS 104, DB Forensic ensures that the financial evidence used in a business valuation is credible, transparent, and capable of standing up to scrutiny in family law proceedings.
Need Clarity on the Financial Evidence Behind a Business Valuation?
If you are involved in a family law matter where a business valuation is required, obtaining clear and reliable financial analysis is essential.
DB Forensic provides independent forensic accounting and valuation services to help lawyers and clients understand the true financial position of a business.
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