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The value of a business in a divorce

On Behalf of | Aug 29, 2016 | Divorce

Michigan courts follow the principle of equitable distribution to determine how to divide a couple’s assets at the time of their divorce. While some assets are easier to value, businesses tend to be more difficult to appraise.

Divorce attorneys are often tasked with the difficult task of determining the value of a business when leading property settlement negotiations. This can be a complex process whether it is a sole proprietorship, partnership or limited liability company. However, since the business may represent one of the most valuable assets that a couple has, it is important to derive an accurate value.

In order for an asset valuation to be accurate, it is important that the person performing the appraisal be well-versed in this task. Analysts typically prepare reports in which they detail how they arrived at a particular calculation to use by a third party such as a judge or arbitrator. Sometimes the valuation takes the form of a full valuation that provides a robust evaluation. This evaluation typically costs more due to the greater amount of work expended on the evaluation. Some businesses are more complex and may need this type of evaluation in order to provide an accurate value of the business. Other times, a calculation of the business may be performed by the analyst. This calculation is more narrow in scope and may not be as reliable as a full evaluation. However, it may be used in situations in which the parties are in better agreement and simply need an outside opinion.

Property division is often a contentious aspect of the divorce process. It may sometimes be preferable for a couple’s respective attorneys to attempt to negotiate a settlement rather than having the matter determined by a judge.