Best Practices for Negotiating Business Ownership During a Divorce

Send us Fan MailIf you’re a business owner who is going through a divorce, the first step of the process is to determine the value of your business. There are three different approaches utilized in the valuation of a business by professional valuation analysts: the asset approach, the market approach, or the income approach.There are two different types of engagements that a valuation analyst will employ. There's what's called a valuation engagement, and there's what's called a calculation engagement. These approaches, and the scenarios that rationalize their use, are very different.In any divorce, you’re looking at all the assets that exist so that they can be distributed fairly, generally 50/50. When deciding how to negotiate business interests, you’ll consider the worth of all combined assets, the role that each spouse plays in the business and wants to continue to play in the business, and begin negotiations from there to ensure a fair division. This process can vary greatly from couple to couple. Couples will want to consider the basis, and thus taxability, of all assets before making agreements.When navigating a divorce with a business, it’s important to speak with a professional about how you can utilize certain tax laws to your benefit. A CPA will be able to advice you on how to do this. If you would like to speak with one of our family law attorneys regarding your unique family law matter, please call our office at (503) 227-0200 or visit our website at https://www.landerholmlaw.com/ to schedule a free consultation.If you have questions for Darren Hall, CPA, regarding this topic, you can email him at [email protected], or you can call him at (503) 233-1133, and he’ll be happy to assist you.