Business Valuation In Divorce

Business valuations are necessary to ensure a fair allocation of business property in a divorce. The valuation is essentially an appraisal that must be completed by both parties. This assessment will assign a value to the business that the Court uses to make a ruling as to its division. Since it is very rare that the Court will decide on equally shared ownership of the business, it is in both parties’ best interest to provide a truthful and accurate appraisal: the Court can decide to order the business sold if reliable evidence about value is not provided. Because the most common scenario is one party retaining ownership by buying the other party out, a ruling by the Court to sell would mean that someone would lose their business, and someone else would lose all money from a buyout. As such, both parties often have a vested interest in telling the truth.

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In addition to determining the business’ true value, the valuation and appraisal process helps establish the amount of income the owners generate from the shared business, which greatly affects the Court’s calculation of other financial matters such as spousal maintenance and child support in Arizona.

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It is also crucial that a valuation be done because the exact value of a business cannot be accurately guessed or assumed by either party. Most judges have very little faith in the inherently biased word of an interested party, since they often intentionally underestimate the business’ value in order to avoid paying too much.

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Things like anticipated earnings, the economy as a whole, the nature of the business’s industry, competitors in that industry and the ability of either party to access capital or debt in an effort to maintain or expand operations may also affect the appraisal. Such factors make it difficult for even a professional business evaluator to determine true value. That’s why it’s essential to retain the services of a trusted divorce attorney in Phoenix who can help obtain a precise business valuation. Simon Law Group of AZ specializes in and focuses on family law in Arizona- and has done so for 40 years. These responsive and insightful divorce attorneys from Phoenix have handled hundreds of divorce case, including complicated business valuation cases and high asset property divisions in Arizona. To set up a free consultation with an acutely knowledgeable attorney today, call 480-745-2450.