Protecting your business or professional practice in a North County or Carlsbad divorce can be legally quite complex. How is a professional practice or business ownership interest handled in a divorce? What are the primary issues and how do you protect the ongoing operations and value of your business during this difficult time?
The operational aspects of the business should remain unaltered unless both partners are involved in the day-to-day operations of the business. The core issues are:
- Establishing an accurate and fair valuation of the professional practice, business or commercial entity
- Offsetting the value of the owner’s business interest during the division of community property negotiations
Protecting your business or professional practice during a divorce begins with working to establish the right valuation of that asset. The valuation of a business asset is much more difficult than it may appear. Many attempt to assign a false (low) value for the business interest or ownership portion of a professional practice within the documents and agreements of the business entity itself. This simply will not pass the judgment of the court.
There are several ways to value a business or the interest in a company or professional practice. One method is to use a “multiplier” appropriate for that business or industry. For example, if the multiplier is 4.5 you would take the annual gross revenues for the business and multiply it by 4.5 to establish its valuation. If annual gross revenues were $1 million in this example the business valuation would be $4.5 million.
Another method is to appraise the business and the value a willing buyer would pay to a willing seller without any outside influences. This requires extensive expertise in the specific business itself as well as the appraisal of such business entities.
The experienced Certified Family Law Specialists at Burke & Domercq have decades of experience in these cases. We protect our client’s interests and objectives in these cases and work to ensure that a fair valuation is established. Once this is accomplished, the community property interest in that business must be offset by other assets such as investment or trust accounts, home equity, savings or retirement assets or other community property.
Protecting your business or professional practice in a North County or Carlsbad divorce is quite legally complex and you will need the advice, counsel and advocacy of the experienced attorneys at Burke & Domercq. We invite you to review the strong recommendations of our clients and the legal industry and contact us or call 760-389-3927 to learn more about the valuation and division of a business interest in a divorce and to schedule an appointment with one of our attorneys.