In certain situations and divorce proceedings, it can be beneficial and indeed necessary to use a divorce business valuation expert. This professional is used in when the divorcing couple owns a business, has business investments like stocks and bonds, or investment properties, such as rental homes.
Some divorce lawyers are experienced at valuing business holdings, while others may have their own business valuation expert as part of their legal team. The reason you will want to consider using a business valuation expert is because most divorcing couples do not have an idea of the actual value of their business investments and commercial holdings.
For instance, with a business operating from a physical address, there are several aspects to consider in determining what a fair market value is, including:
- Profits/Net Earnings
Depending on the level of involvement in the day-to-day operations of the business, one person may not know the actual value of their business interest.
In addition, disagreements about who should get the business can also arise. One party might feel like they are entitled solely to the business simply because the other party was not active in the day-to-day operations.
On the other hand, the other party may feel they are entitled to the business, even though they were not involved in the day-to-day operations because they were the one that invested the money initially to start the business.
Please keep in mind, this is just one example of a business investment a divorcing couple may own. There could also own shares, stocks, bonds, partial ownerships in other businesses, and so on. In some cases, one party may have no idea the extent of commercial and business holdings the couple owns, or have interests in or investments in.
Certain assets may be tax-sheltered, but, generally speaking, a valuation will take into account the taxes a party will have to pay down the road when the asset is actually liquidated. A good example of this is a company pension. The pension may be valued, but the party receiving the pension in the future will receive it as taxable income, and therefore, the net, after tax value has to be calculated.
Without a divorce business valuation expert, you could easily be misled by the other party, even though they are required to disclose all assets as part of the divorce. They might attempt to undervalue the business or related investments as a means to get you to agree to a settlement for less than you may be entitled to receive.
A business may also have “goodwill” as part of a valuation- the importance of the relationship of the business to its customer base, which is not as obvious as physical assets. A business may also have debt, which will have to be factored into the valuation calculation.
Utilizing the services of a divorce business valuation expert through your divorce lawyer helps protect your interests. They will review all current commercial and business holdings owned jointly or solely and acquired over the course of the marriage. It will provide you with an unbiased businessappraisal, one which can be explained in Court by a professional if necessary.
The valuator will determine the fair market value of the business or other asset as of the date of separation to determine its actual worth for the purpose of equalizing property. Knowing the fair market value is essential in ensuring all matrimonial assets are divided equally between the divorcing couple.
If you and your spouse own a business, commercial properties, or have other significant business investments and assets, and you are preparing to file for divorce, you need an experienced divorce lawyer that understands the complexities of these types of divorce. At Davies Law Firm, we have that experience.