Valuing a Business in Divorce
February 19, 2009 By Maury D. Beaulier, Attorney at Law
Valuing a business in a divorce is an important part of the property division. An error may affect a party significantly resulting in a loss of thousands, tens of thousands, or, in some cases, more. Understanding the importance of a valuation and how it occurs is a significant part of your case.
In today's booming economy, it is more and more common for divorcing couples to struggle with the valuation and 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.
Often, only one marriage partner is actively involved in the business. That partner will generally underestimate the value of the business or business interest as part of the divorce process. The other 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. This can be financially disastrous.
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. Appraisers generally produce written reports which detail the analysis and steps taken to reach a value conclusion. Even in mediated divorces, appraisals are important. The parties may select a joint appraiser which helps reduce the costs associated with the appraisal for both parties.
The Institute of Business Appraisers (IBA) and the American Society of Appraisers (ASA) have also issued standards for valuing businesses. Although each business appraisal may require an appraiser to make certain assumptions about the business or industry, each appraiser follows a similar general procedure applying professionally accepted standards. This has decreased the variability valuations. In short, if two appraisers review the same business, they may arrive at different values, but the gap between their appraisals should be fairly narrow. As a result, a professional appraisal would eliminate the inequitable result that Ms. Sax encountered in her divorce.
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 valuation of the business and provide advice on the legal consequences.
ABOUT THE AUTHOR: Maury D. Beaulier
Maury D. Beaulier is a recognized leader in divorce and family law. He is a sought after speaker and has appeared on National programs on a myriad of family law and father’s rights issues.
Copyright Maury D. Beaulier, Attorney at Law
More information about Maury D. Beaulier, Attorney at Law
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Often, only one marriage partner is actively involved in the business. That partner will generally underestimate the value of the business or business interest as part of the divorce process. The other 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. This can be financially disastrous.
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. Appraisers generally produce written reports which detail the analysis and steps taken to reach a value conclusion. Even in mediated divorces, appraisals are important. The parties may select a joint appraiser which helps reduce the costs associated with the appraisal for both parties.
The Institute of Business Appraisers (IBA) and the American Society of Appraisers (ASA) have also issued standards for valuing businesses. Although each business appraisal may require an appraiser to make certain assumptions about the business or industry, each appraiser follows a similar general procedure applying professionally accepted standards. This has decreased the variability valuations. In short, if two appraisers review the same business, they may arrive at different values, but the gap between their appraisals should be fairly narrow. As a result, a professional appraisal would eliminate the inequitable result that Ms. Sax encountered in her divorce.
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 valuation of the business and provide advice on the legal consequences.
ABOUT THE AUTHOR: Maury D. Beaulier
Maury D. Beaulier is a recognized leader in divorce and family law. He is a sought after speaker and has appeared on National programs on a myriad of family law and father’s rights issues.
Copyright Maury D. Beaulier, Attorney at Law
More information about Maury D. Beaulier, Attorney at Law
View all articles published by Maury D. Beaulier, Attorney at Law
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
