Building a life together can mean many things, including having children, investing in property or sharing a business. When either spouse owns a business, the divorce process can be complicated due to the need to value the business. However, pursuing a collaborative divorce can make the business valuation process fair and easy.
Collaborative Divorce: An Alternative to Traditional Divorce
Collaborative divorce offers a different way to end a marriage. Instead of participating in often-traumatic courtroom proceedings, which invite confrontation and conflict, collaborative divorce involves using an amicable process where the goal is to meet a family’s needs, whatever that means in your unique situation.
As part of this more civil process, the couple uses professionals to offer input on things that often cause conflict, such as financial situations and custody arrangements. This approach can also be used to value the business when the couple jointly owns one.
Collaborative Divorce Business Valuation
To obtain a business valuation, the couple employs a neutral business valuation expert without ties to either spouse. They pledge to work as part of the collaborative team, cooperating with both spouses.
This eliminates the adversarial setup that can come out of a traditional divorce process. For instance, one spouse might use a business valuation expert who places the business’s value in six figures, while the other spouse’s expert could provide a far lower number. That sets up conflict over not only how much the business is worth but also how to fairly divide or dissolve it, depending on the couple’s preference.
Using a neutral business valuation expert also allows both spouses to get a say in the discussion. They can both ask questions of the expert and participate actively in the information-gathering process.
The expert will go over a wealth of information about the business to come up with a value, including:
- Contracts
- Ownership agreements or other documents
- Tax returns
- Accounts payable and receivable records
- Owner compensation
- Records of personal expenses
- Fixed asset schedules
The expert will also often conduct a site visit to the business to observe the company’s operations and to gather additional information from the owners or management. In making their assessment, the expert will generally consider the current marketplace for the goods or services the business provides as well as any assets the business owns and income they bring in.
Reaching a Final Number
The expert will then meet with the couple and others involved in the collaborative divorce process to explain their findings. The transparency continues, with the expert available to answer questions about how they arrived at that number and discuss how other scenarios could impact the valuation. The spouses avoid the time and expense of going through an extensive discovery process and having to pay other experts to deliver information and insights on the business.
Contact Us to Explore Business Valuation in Collaborative Divorce
Are you looking for a business valuation in a divorce and want to try a different approach? Collaborative Professionals of Central Pennsylvania specializes in collaborative divorce. We invite you to reach out to the professionals listed in our Professional Directory today to discuss your needs and schedule a free consultation.