How is the Pereira Analysis Used in a San Diego Divorce with a Business

How is the Pereira Analysis Used in a San Diego Divorce with a Business

Pierre Domercq Professional Practice & Business Ownership

What is the Pereira Analysis and how is the Pereira analysis used in a San Diego divorce involving a business or professional practice?  When a San Diego divorce involves a business asset and any portion of that asset is characterized as community property a complex legal and financial process is necessary to complete property division.  The basic steps in this process are to establish whether the business asset is in whole or in part to be characterized as community property, and if so to establish the valuation of that asset.

While there are many sound methods for determining the valuation of a business or professional practice in a San Diego divorce the method applied depends a lot upon the nature of the business itself.  The Pereira Analysis is usually considered when the profits of a business or the appreciation in value of the community interest in the company is directly attributable to the work of the spouse(s) in the community.  This method usually applies to a small business interest where the business might not be viable without the direct involvement of the owner(s).

Generally speaking, in the Pereira Analysis the Court will begin with the value of the business asset at the time of the marriage.  That value is multiplied by a factor which is considered to be a reasonable rate of return based upon the nature and scope of the asset involved.  Once the Court has established the reasonable rate of return over the period of the marriage the amount of the community property interest in the business is established and the business owner must offset that value from other assets or community property in order to keep the business after the divorce.

The Court has been known to blend the Pereira Analysis with the Van Camp Apportionment when the nature of a spouse’s direct involvement in the business has changed over time.  The valuation and apportionment of a business or professional practice interest in the community property division aspect of a San Diego is a complex legal and financial issue.  You need the experience of the proven Certified Family Law Specialists at Burke & Domercq to protect your interests and provide sound advice and counsel.

We invite you to review the strong recommendations of former clients and the legal industry, protect your own interests and contact us or call 760-434-3330 to schedule an appointment for a safe, confidential and private consultation with one of our experienced and proven Certified Family Law Specialists.