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How to calculate business value during a divorce

Minnesota residents who are facing the end of a marriage and who own a business may need to find out the value of the company. How this is approached may depend upon a number of factors including how amicable the divorce is and how complex the business is.

There might be a full valuation or a calculation of value. A full valuation is more accurate, more time-consuming and more costly. A calculation of value is quicker and less expensive but also less reliable. However, it may be sufficient if a couple is using mediation or other methods of negotiation to reach a divorce agreement. If a judge or an arbitrator needs the information, a full valuation may be necessary.

In some cases, the approach may be decided based on how adversarial the divorce is. If a couple is able to work together and cooperate, they might also be able to move ahead with just a calculation of value.

There may be a number of complex factors around how to divide a business during a divorce. These include how much each person participated in the business and whether a prenuptial agreement was signed. An attorney might be helpful at this stage in guiding a person’s decision for long-term financial security. While an amicable divorce might be less expensive and provide an easier adjustment for any children from the relationship, people should not sacrifice their financial security just to keep the divorce amicable. One example might be if a person did not directly contribute to running a business but ran the household and took care of the children while the other spouse worked long hours. Stay-at-home spouses might argue that their indirect contributions were critical to a company’s success and that they deserve a share of its value.

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