Very little about entering into the divorce process is easy, but the more enmeshed you and your current partner are the more difficult it can be to separate. This is true with couples who have kids or pets or own property together; divorce can be especially precarious for couples who own a business together.
Nevertheless, if you choose to work with an attorney who is specializes in business valuation as well as family law, the proceedings can be manageable and even smooth.
Here are the first steps to solving for a divorce in which you and your current spouse own a business together.
Step 1: Third-party appraisal
In order for the court or any mediators to make a ruling on the division of a business, the owners must first authorize a thorough appraisal, to be conducted by a third party. Given that both you and your spouse have vested interest in the value of the business, a professional assessment by either of you will not be enough. Regardless of records and experience that you have, you must hire a third party appraiser to conclude the true value of your business.
Look for a business valuation expert who is certified or recognized by a national organization. Check for up-to-date education and significant experience evaluating businesses that are similar to yours. Do they have a reputation for being objective and thorough? Carefully research before hiring an appraiser, or ask your attorney for a recommendation.
Step 2: Calculate value
Once the true value of the business has been confirmed, this number will be used to deduce how much income will be generated for whoever owns the business. This will affect other details such as child support and spousal maintenance.
The court may also factor in the overall economy, the state of the current market, competitors, and other relevant aspects of the business.
Step 3: Hear ruling
With all this information at hand, the court will issue a ruling to divide the business between you and your partner. It is very rare that the court orders the business to be divided equally. This make the appraisal process even more important, as you want to ensure all details are accurate and reflective of the true state of operations and investment.
Step 4: Consider options
Once the court has officially decided how the business will be divided, you have a choice to make. One of the most common outcomes is that one partner will buy out the shares awarded to the other. Sometimes they will agree to sell the business together and split the profits according to the judge’s ruling.
As you go through this process, every step is critical for ensuring a positive outcome for you. The best way for you to do this is by working with a skilled family law attorney who also has experience handling divorces that include business valuation.
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