My husband and I are divorcing and I own a successful business. While there are many issues we need to work through as part of our divorce, one of the largest questions we have is how to agree on the value of my business. It is our goal to work through this difficult time in a reasonable, efficient manner. Do you have any suggestions as to how best to move forward?
I’m sorry to hear about your impending divorce. In working with divorcing couples for more than 25 years I’ve witnessed two paths that couples can take.
The first is to fight each other on every issue that needs to be considered in dividing the marital property. As a consequence, they spend inordinate amounts of money on attorneys and experts.
The second path is to identify all the issues to be addressed and assets that need to be appraised. Many items of personal property, such as cars, furniture, etc., can be agreed upon between the spouses without any outside assistance. Other, more valuable assets, such as your residence and business, typically require an appraisal.
Agreeing on one appraiser for a joint appraisal can save significant costs, time and emotional stress. In your correspondence, I noted you mentioned that you and your spouse would like to work through your divorce in a reasonable, efficient manner. This tells me you might well benefit from a joint business appraisal.
A joint business appraisal is a viable option when couples can agree to full disclosure and transparency. The process begins with the joint hiring of a business valuation firm, preferably one that is accredited by the American Society of Appraisers. Both spouses are included in all steps of the valuation process, including all meetings and communication/correspondence. When the valuation is finished, both parties understand clearly how the conclusion was reached.
Valuation need not be a black box where information is fed in and a conclusion is issued that is not understood by the parties. A transparent, joint valuation—once completed—is understood by both parties because both were involved in the entire process. This naturally leads to more readily reaching an agreement regarding the value of the business. An added bonus is significant savings in cost, time and emotional strife.
Cathy is the President of Capital Valuation Group, Inc., headquartered in Madison, WI. Capital Valuation Group has been helping business owners across the country understand, increase and unlock the value of their businesses for over 40 years through keynote speaking, valuation analysis, determining damages and providing expert witness testimony. Cathy can be reached at firstname.lastname@example.org.