The valuation of a business or professional practice is often a common area of disagreement in what is already an emotionally charged proceeding – the dissolution of a marriage.
In today's economy, it is more and more common for divorcing couples to struggle with divorce business valuations in regards to the division of a small business as part of the divorce process. Remember, even if the ownership interest is in the name of only one spouse, it may be marital if it was acquired, improved upon, or financed during the marriage.
Only One Partner is Involved in the Business
Involved partner will generally underestimate the value of the business or business interest as part of the divorce process.
Uninvolved party may not seek an independent appraisal under the misguided belief that the appraisal will cost too much electing, instead, to rely on the estimate of their spouse.
Business valuations are cost effective and even essential as part of divorce proceedings Cutting corners to save on the cost of an appraisal may wind up costing you a significant amount more
Even in mediated divorces, litigation support is important. Appraisers generally produce written reports that detail the analysis and steps taken to reach a value conclusion. The parties may select a joint appraiser that helps reduce the costs associated with the appraisal for both parties.
Regardless of the size of the business, it is critically important that you retain an attorney experienced in complex property issues. An experienced attorney will work closely with the qualified appraiser to arrive at a fair divorce business valuation and provide advice and litigation support.
Questions that should be addressed in a divorce valuation for marital dissolution:
What is the definition of goodwill and how is the goodwill value determined in the context of a marital dissolution? How does the valuator handle goodwill in a professional practice?
What valuation methods are appropriate in the context of a marital dissolution? What valuations methods are not appropriate?
What is the proper (required) date of the valuation (separation, filing, trial)?