How is a Business Interest Valued in a Carlsbad Divorce?

Pierre Domercq Divorce

How is a business interest valued in a Carlsbad divorce? How will the business interest itself be handled during community property division? How do you preserve Goodwill and the smooth operations of the business during a divorce? If you are considering a divorce in Carlsbad or North County and either of you or the two of you together own a business or an interest in a business you will need the representation of an experienced and skilled Carlsbad divorce attorney.
The first step in this process is to establish the valuation of the interest in the business. This will be based upon expert testimony and valuation calculations based upon one of several methods. The first is the appraised value of the business based upon industry standards and comparables. The second is a “factored” approach based upon multiplication of annual gross sales by an “industry factor” for like businesses. The third is the value of the business or business interest if it were put up for sale on the open market.
Each expert will have their own opinion of the valuation of the business and this issue itself can be quite contentious.
If the business is considered to be the “separate” property of one of the spouses it is not part of community property division. If the interest in the business was acquired during the marriage or marital funds were invested in the business the asset will either be considered as community property or a “blended” asset (part of which is community property, part as the “separate” property of a spouse).
The spouse who owns the interst in the business owes a “fiduciary duty” to take continuous action in the best interests of the business to maintain ongoing business and to preserve vendor and customer relationships. The smooth continuous operation of the business is in the interest of all parties.
If part or all of the interest in the business is considered to be community property that portion will be divided equally between the parties. If one spouse intends to continue in the business that party will be required to offset half of the valuation of the business interest with other community property. This can be accomplished with equity in the family home, investment accounts, stocks or other assets or retirement accounts.
The experienced divorce attorneys at Burke & Domercq have decades of experience in Carlsbad and North County divorce cases which include business ownership. Protect your interests in the divorce and contact us or call 760-712-3741 to schedule an appointment with one of our attorneys.