Businesses make divorce more complicated for their owners

On Behalf of | Oct 21, 2020 | Divorce

There is a financial component to the divorce where the assets are equitably distributed. It can involve property, retirement plans, money, stocks, art, and other assets, but business owners will often face additional complications if they hope to maintain ownership. Unless there is a prenuptial agreement in place, a business owner can face losing control of his or her business or be forced to sell it.

Valuing the business

It is critical to determine the business’s accurate value, which must be done to establish the entire estate’s value. Factors considered during valuation include:

  • Net profits
  • Growth trends and potential
  • Age of business
  • Company assets
  • Competitors in the market
  • Online traffic and sales

 Unique issues business owners face

Owners can sell homes, cars, or even art collections on the open market, but a business’s value is less tangible than market value. Owners can sell the company, but often it has more value when the founder or owner operates it. The value may fluctuate because of economic forces or the timing of the divorce. In some cases, the couple may have built a business together and need to determine whether they wish to remain partners or if one buys out the other. Regardless of the arrangement, there are often disagreements over the price.

Outside experts complement the legal experience

Some family law attorneys are adept at understanding a financial ledger, but it is sometimes necessary to have business valuation experts to provide additional insight. Whether you are an owner who built a start-up with your own hands, bought a franchise, or partnered with a spouse, attorneys and consulting experts can determine a fair and balanced agreement that protects the business’s value, its owner, and his or her spouse. The couple can do it as part of divorce mediation. But those with complicated estates may reach an impasse where litigation becomes necessary.