One of the first steps in the property division phase of a divorce is assigning a value to all marital assets. For some assets, this will be simple because you can discover the cash value with little effort. However, when it comes to a business, this can be a tricky process.
According to the American Bar Association, valuing a business can take a lot of time and money unless it is a publicly traded company. If you have a public business, you should know the general value due to public records. If you have a private business, though, you may have no idea what it is worth. You will need to do some investigation.
Professionals provide valuations
To determine the value of the business, you will need to hire an expert who can properly go through the financial aspects of the business to reach an appraisal. Your spouse may also hire his or her own professional to do the same thing.
Judge resolves disagreements
It is not uncommon for financial experts to disagree on the value of a business. Valuation is a complex process with many factors that can affect the final result. The approach and considerations an appraiser uses can create disagreements.
You must present one valuation to the court. If you cannot do this, the judge will consider both valuations and make a judgment on which is the most accurate. This can make the divorce process take longer.
Partners cause complications
Reaching a valuation can also become more complex if your spouse is not the sole owner of the business. If there are partners, it can complicate the process. A partnership agreement or some other contract may make it impossible to sell the whole business. The smaller the spouse’s interest in the business is, the more complicated it may be to reach an accurate valuation for the divorce.