If you are ending your marriage and you or your partner has an ownership interest in a business, that interest is a component of your marital property. Unless you have a prenuptial agreement stating otherwise, you both have a right to a portion of the business’s value.
Business valuations following a Southbury divorce can be contentious. The dedicated property division attorneys at Dolan Divorce Law can guide you through the process, assist you during negotiations, and advocate effectively for your desired result should negotiations fail.
Connecticut’s system for dividing property in a divorce is unusual because a court considers all property that either partner owns on the date of separation to be marital property. It does not matter if a partner owned the property before marriage or inherited it—both partners are entitled to share in the property.
Connecticut General Statutes §46b-81 gives judges broad discretion to decide how to divide marital property. They can consider the length of the marriage, the reason it failed, each partner’s future earning capacity, and numerous other factors. The division need not be equal, but it must be fair considering all the circumstances.
If one or both partners have an ownership interest in a business, that interest is divisible in a divorce. When possible, the couple should decide whether the business will remain operational and, if so, how they will divide their interests. A Southbury attorney can explain the implications of the various options regarding the business and its valuation, help a divorcing partner determine their preferred outcome, and work to achieve it.
Determining the business’s value is a crucial step that impacts the overall property settlement. A business valuation expert is essential in order to accurately and credibly ascribe the value.
There are several legitimate methods for valuing a business. The simplest involves assessing the business’s assets and subtracting its liabilities, but this method is best when a divorcing couple intends to close the business. If the business will continue in operation, whether under one of the divorcing partners’ ownership or someone else’s, a method that focuses on the business’s projected future income or the sale price of comparable businesses may provide a more realistic value.
A proper valuation will account for the difficulty in selling a minority interest and any existing buy/sell agreements, when applicable. A Southbury attorney will have a network of business experts and appraisers who can offer informed opinions about the most favorable valuation method for your specific situation.
Agreeing on a value for a business can be time-consuming and contentious. Ideally, a couple will agree on a method and a professional to carry out the valuation. Frequently, however, each partner obtains their own professional opinion and then negotiates to agree on a value based on the different appraisals.
Once the couple has agreed on the value of the business, they must apportion it between them. Typically, this involves one partner buying out the other’s interest. They can accomplish this by providing a larger share of the couple’s other property to the partner who will not retain an interest in the business.
Ensuring that the partner giving up their interest in the business receives appropriate compensation while preserving the viability of the business can be complex. It is important to work with a Southbury divorce attorney to achieve a workable, equitable settlement that properly values the assets involved.
When a business owner divorces, they must deal with the potential disruption of their professional life as well as their family life. This can make divorce more challenging to navigate emotionally and far more complicated financially.
Business valuations following a Southbury divorce are a critical step in this process. Schedule a free consultation with a member of our experienced divorce law team to learn more.
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