Valuing a business during a divorce

On Behalf of | Jan 18, 2018 | Property Division |

Property division negotiations sometimes become contentious when New Jersey couples file for divorce, and this can be especially true when a family business is one of the assets being discussed. Such commercial ventures are often run by one of the spouses involved, and non-operating spouses frequently believe that the business is far more profitable than it actually is. Thorny matters generally include the value of the enterprise and how much income it generates each month.

One way of dealing with these issues is to call upon professionals with experience in this area. Certified public accountants who are Accredited in Business Valuation by the American Institute of Certified Public Accountants or who are Certified Valuation Analysts may provide an expert opinion, but finding one that both spouses agree on can be a challenge as only about one in a hundred CPAs have completed the specialized training required to earn these qualifications. However, searching for a qualified accountant could be important as courts might not accept business valuations provided by unaccredited CPAs.

Business valuations are formal documents that describe the type of business entity involved and the interests of the owners. Values are based on the economic environment the business operates in and may take historical data and projected future earnings into account. These documents are drafted after financial statements have been scrutinized closely, and the compensation packages of business owners may be adjusted to bring them more into line with prevailing market conditions.

Experienced family law attorneys may seek to keep property division talks on track by recommending accountants that are able to convey complex financial information in a way that divorcing spouses can understand. Spouses often become belligerent when they feel like they are being cheated, and accountants who use overly technical language may nurture rather than dispel these suspicions.



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