Valuation of a business in a California divorce

When a business needs to be divided in a divorce, there can either be a full valuation or a calculation of value. The full valuation takes longer and may cost more to complete. However, it is generally more accurate, and it is worthwhile to conduct if the report needs to be used by a judge when making a final ruling.

This doesn’t mean that the full valuation is worthwhile in every case. In the event that both sides trust each other and don’t want to fight, the calculation of value may be a good enough rough estimate upon which to base negotiations. It might also be good enough in the event that both sides have limited resources to devote to their settlement. The complexity of the business should also be taken into account as the value of some businesses must be determined by a full valuation as a practical matter.

In a high-asset divorce, determining the value of a given piece of property may not be straightforward. For instance, the value of a business may be determined by its share price, how much its equipment is worth or a combination of both. If a business has appreciated since an individual has gotten married, he or she may be entitled to a portion of that appreciated value.

An attorney may be able to find outside experts who can work to handle a company valuation that an individual can then use for negotiation purposes. In some cases, it may be possible to agree that whoever leaves the company won’t collect on his or her share until it is sold or at some other later date. This prevents the company from being sold hastily and below market prices.