Business Valuation

Many divorce proceedings involve a business – may be the business was solely owned by one spouse before marriage but the spouse built it during the marriage, or maybe the business was acquired during the marriage. In either case, chances are that the party operating the business (the “in-spouse”) wants to get out of the marriage with the business; and the party who doesn’t operate the business (often termed the “out-spouse”) wants to be paid a premium for the community’s interest in that business.

Some businesses were operated by both parties during the marriage, and each wants to receive the business and buy out the other’s interest – again, for as little as possible.

Some businesses will have a substantial community value; others, very little. Experienced family law attorneys can advise and assist you in determining whether you should spend precious resources to value the business, and if you do, how to ensure the outcome works for you.

At Hartley Lamas Et Al, we find it far more cost-effective for our clients to get an expert involved in valuing the business, and determining the business’s cash flow, as soon as possible once the divorce gets underway. We have a few trusted expert forensic accountants who are well known to us, and well-regarded in Southern California courts, who can efficiently and accurately determine whether and how to best value the business so our client’s resources are wisely used – and, once that decision is made, to actually do the valuation. Sometimes we prefer to have our own experts do the work; sometimes we like to have the parties hire a “joint,” or “neutral” expert, to be appointed by court order. If the parties can agree to the use of a neutral expert to appraise the business, that will often lead to settlement on the issues concerning the business, rather than requiring a full-blown trial.

Does the use of an expert mean you don’t need an attorney? No! To get the best results from your business valuation in a divorce proceeding, teamwork between your attorney and your expert is essential. The expert can form an opinion; the attorney ensures that the opinion is based on good facts and that the opinion can be received into evidence by the Court. Spending money on an expert opinion which the Court cannot consider is a waste of money – just as spending all your money on the attorney, without investing in good, admissible evidence in the form of an expert opinion, can be catastrophic to your property interests and long-term financial future.

In the case of a family-owned business, whether large or small, the key is getting good, trustworthy information to the Court. That’s our job, as family law attorneys, and we are good at it.