Any division of assets and property is a difficult task in a divorce. However, when two spouses share a business together, it is extremely complicated to construct a property division in Arizona that is to the liking and satisfaction of both parties. Each spouse often- and rightly- has very strong feelings about how the shared business should be allocated. Because divorce cases involving business valuations are quite rare, it’s very important to obtain the services of a divorce attorney that deeply understands this aspect of marital property rights in AZ. At Simon Law Group of AZ, a specialized and aggressive attorney can answer questions about this intricate and delicate matter anytime Contact Our Firm.
How Business Valuations Work
Business valuations are necessary to ensure a fair allocation of business property in a divorce. The valuation is essentially an appraisal that must be completed by both parties. This assessment will assign a value to the business that the Court uses to make a ruling as to its division. Since it is very rare that the Court will decide on equally shared ownership of the business, it is in both parties’ best interest to provide a truthful and accurate appraisal: the Court can decide to order the business sold if reliable evidence about value is not provided. Because the most common scenario is one party retaining ownership by buying the other party out, a ruling by the Court to sell would mean that someone would lose their business, and someone else would lose all money from a buyout. As such, both parties often have a vested interest in telling the truth.
In addition to determining the business’ true value, the valuation and appraisal process helps establish the amount of income the owners generate from the shared business, which greatly affects the Court’s calculation of other financial matters such as spousal maintenance and child support in Arizona.
It is also crucial that a valuation be done because the exact value of a business cannot be accurately guessed or assumed by either party. Most judges have very little faith in the inherently biased word of an interested party, since they often intentionally underestimate the business’ value in order to avoid paying too much.
Things like anticipated earnings, the economy as a whole, the nature of the business’s industry, competitors in that industry and the ability of either party to access capital or debt in an effort to maintain or expand operations may also affect the appraisal. Such factors make it difficult for even a professional business evaluator to determine true value. That’s why it’s essential to retain the services of a trusted divorce attorney in Phoenix who can help obtain a precise business valuation. Simon Law Group of AZ specializes in and focuses on family law in Arizona- and has done so for 30 years. These responsive and insightful divorce attorneys from Phoenix have handled hundreds of divorce case, including complicated business valuation cases and high asset property divisions in Arizona. To set up a free consultation with an acutely knowledgeable attorney today, call 480-745-2450.
Selection of Business Valuation Expert
In Family Court the selection of a business valuation expert is critical in determining the value of a family business. In selecting a properly qualified business valuation expert the following factors should be considered:
- Are they certified by a recognized national organization?
- Are they current and up to date in their education and continuing education?
- Do they have significant experience in similar businesses and what is their experience in?
- Do they have a reputation for being objective, independent, and recognized by Courts as a qualified independent business expert?
- Are they willing to document and detail a projected cost valuation putting a ceiling on time and expenses?
- Are they familiar with the Arizona Court Rules and Procedures regarding expert witness qualifications and opinions?
- Does the expert have familiarity with a Rueschenberg Analysis and other current trends regarding community and non-community business interest?
- In conducting a business valuation does this expert utilize the three generally excepted approaches to valuation:
- Asset Approaches
- The expert will then have to justify which of the three approaches is the best for this particular valuation.