By Bethany Dria, Senior Associate | Business Valuation
The process of a divorce can be a complicated, contentious, and often an emotional journey. The divorce proceeding (whether collaborative or not) can be even more complex and costly when one of the marital parties holds ownership in a business or the marital parties hold significant assets. Domestic relations attorneys are experts in the legal arena but may not be as knowledgeable regarding the financial aspects of a divorce. Hiring an independent business valuation expert can help in several ways:
- Assist the marital party/parties (and their respective attorneys) calculate and understand the value of marital assets, including the value of any ownership interests in businesses. It is common that the parties might not have a full understanding of what the marital assets are, and the fair value of those assets for domestic relations litigation. A business valuation professional can help identify what assets exist and the fair value of those assets, even if the asset is not traded freely in the marketplace. A common example is an ownership in a privately-held business – since ownership is not traded openly in the stock market, the value of the ownership is not always straight-forward. Hiring an independent business valuation professional that is experienced in valuation for litigation purposes can provide a relative value opinion for the ownership interest held by the marital parties.
- Help the marital party/parties (and their respective attorneys) determine the appreciation of any assets during the marriage, including the appreciation of any ownership interests in businesses. Appreciation in value can be as complex as determining the value in some cases. Analyzing assets for marital, active, and passive appreciation requires careful consideration.
- Help the martial party/parties (and their respective attorneys) understand the tax implications of the division of marital assets. The new tax law changes also lead to new implications during the divorce process. Trust an expert to help navigate through the ever-changing rules and regulations surrounding tax matters.
- Help the marital party/parties (and their respective attorneys) calculate and understand the income available for spousal support. The business valuation process strives to measure and understand the earning capacity of the business. Also, a business may be paying expenses on behalf of the owner, which could potentially be included as income available for support.
- Help the marital party/parties (and their respective attorneys) calculate and understand any separate property claims. We discuss this concept here. Separate property claims can be tricky yet meaningful in certain scenarios. Trusting an expert in the area of separate property tracing is especially important for these complex scenarios.
Domestic relations litigation is not an easy process, and when significant financial components are included, trust a business valuation professional to help you calculate and understand the financial implications. Ownership of a business can especially complicate matters; Apple Growth Partners can assist in an objective and confidential method to understand business ownership’s impact on the divorce process. Apple Growth Partners’ team has collaborated with numerous domestic relations attorneys in the Northeast Ohio region and has meaningful real-life experience in the courtroom and with the collaborative divorce process. Contact me today to see how we can help you.