If you are going through a divorce and a business is involved, then a business valuation will most likely be a part of your divorce process. The first part of the process will for the party to request financial records regarding the business. These documents will be asked for through a process call discovery. After the documents are received from the requesting party, they will be examined to see if anything is missing. If there are financials missing, then the party could request supplemental discovery from the opposing party. The requesting party also has the option to request discovery from the business directly through non-party requests. However, it is important to note the cost discovery requests can rack up when the parties have to request documents more than one time or a discovery dispute takes place. In some cases, the business may object or refuse to produce the documentation.
After the business financial documents are in your possession, then an expert appraiser will need to be retained. The expert will be an additional expense and good experts will be expensive. In some cases, the parties will agree on a valuator and can split the cost. Also, it is possible for each party to obtain their own expert but this is a costlier approach. The job of the evaluator is to determine the value of the business and each party’s stake in the business. The expert can give also advice the party on the best approach to obtain the value of the business. The expert will consider three important factors when accessing the property: (1) Whether one spouse owned or had interest in the business before the marriage (2) Value of the business or interest held at the start of the marriage (3) Value of the business of interest held at the time of divorce. Jones-Shaw v. Shaw, 291 Ga. 252 (2012) The evaluator can also be used as an expert in Court and can testify to the value of the business.
Goodwill and Business Valuation
Another aspect the expert will evaluate during the process of a business valuation is goodwill. There are two types of goodwill personal and enterprise. All businesses generate some time of goodwill as they serve the public. Personal goodwill in the state of Georgia is not considered a part of the marital estate, and will not be counted in the valuation of a business. On the other hand, enterprise goodwill is taken into account during the valuation.
It is important to have an experienced Divorce attorney on your side when going through the process of business valuation. Give us a call toll-free at 866-527-2630 to set up a consultation with one of our experienced Marietta Divorce Attorneys.