Calculating the value of a business in a divorce

On Behalf of | Aug 3, 2017 | High Asset Divorce

When a Minnesota couple is getting a divorce and one or both of them owns a business, that asset will usually be divided along with other shared marital property. The couple will need to decide whether to have a skilled valuation analyst do a calculation of value or a full valuation.

A calculation of value is less costly and takes less time, but it is also less accurate. It is generally more appropriate if the business value is needed for mediation or other informal purposes. If a couple is cooperating with one another, they may be able to work to an agreement using this method of valuation.

If the relationship between the couple is more adversarial and trust has broken down between the two of them, a full valuation may be necessary. A full valuation might also be needed if a third party needs the value for a more formal process, such as a judge or an arbitrator. If the business is large and complex, a full valuation may also be needed.

The process of dividing a business during a high-asset divorce may be emotional for a couple who built the business together and are now faced with the prospect of selling it or continuing to run it after they end their marriage. Furthermore, there could be additional complications such as difficulty in selling the business in a timely way. On the other hand, if only one person has run the business, that person may resent the idea that the other spouse has a claim on the business although that spouse may have provided child care and other necessities while the business was created. It may be particularly critical for a spouse who earned significantly less to ensure financial security after the divorce by claiming an equitable part of the business.