When a couple has been together for a long time, dividing assets during the course of a divorce can be a complicated endeavor. It can be hard to quantify the time and effort put into building a life together and the emotional and symbolic value of each spouse's contributions to the marriage. This may be made even more difficult when spouses are co-owners of a business together. In many instances, it will be impossible for spouses to continue to work together after a divorce, and the value of the business will need to be distributed between the two parties, even if one remains as the sole owner of the company. Determining what a business is worth is a detailed undertaking that often involves expert testimony in court and an extensive review of financial documentation. At Reddin & Singer, LLP, Milwaukee divorce attorney Terese J. Singer has experience in guiding people through this process and can vigilantly protect their interests.Understanding the Business Valuation Process
When determining how to distribute the assets of a business between two divorcing spouses, the first step to take is to obtain an objective valuation of the business itself. Spouses may have competing understandings of the worth of a business, or they may be unsure of how a business should be valued. For this reason, a business valuation expert must typically be retained to provide an opinion and report on the value of the family business.
Wisconsin courts allow spouses to agree on an expert to conduct a valuation, or a court can appoint an expert if needed. The spouses must share the burden of paying for such an expert’s time. If one party disagrees with the expert who is appointed, he or she may also retain an independent expert to provide a second opinion on valuation, but that party will be solely responsible for the cost of that expert.
Business valuation experts can review the financial documents of the business, including tax returns, sales history, profit and loss statements, and other documents that reflect on the income and expenses of the company. This can create confidentiality issues for business owners who may not wish to have the financial details of their company shared with others. In such circumstances, one or both parties can seek a confidentiality order, or protective order, from the court. Confidentiality orders typically require parties to maintain documents in a protected fashion and prevent them from being disclosed to others.
After reviewing all of the financial details, the valuation expert will provide an objective opinion on the fair market value of the business. The fair market value is an estimate of the price that the business would bring if it were put up for sale by a person who wishes to sell but is not required to sell, and purchased by a person who would like to buy but is not required to do so. This valuation may be different from the value of the business were it being refinanced or sold to a competitor in the same industry.
In some situations, the fair market valuation may be disappointing to some parties, or even openly challenged. In such circumstances, either party is entitled to retain an independent expert to provide an alternative valuation that the Court may also consider, although Wisconsin courts typically give greater deference to a court-appointed expert than to a party’s expert.
Once the Court has reached a final conclusion about the valuation of the business, this value will be factored into how assets are distributed between the two parties. For instance, if the value of a couple’s home and a couple’s business are largely similar, a court may decide to grant the home to one spouse, while giving the business to the other spouse.Consult a Divorce Attorney in Milwaukee
If you are concerned about whether your business will be properly valued during your divorce, you may want to seek the opinion of an independent business valuation expert who can provide an alternative valuation for your business in the event that you disagree with the initial valuation. A knowledgeable family law attorney may be critical in helping you pursue your needs and goals. Experienced Milwaukee divorce lawyer Terese J. Singer at Reddin & Singer, LLP, can advise you on selecting a business valuation expert and can advocate for your rights throughout the property division process. Contact our office for more information at (414) 271-6400 or use our online form to set up a free appointment. We represent people in Port Washington, Mequon, Racine, West Bend, Waukesha, and other communities throughout Milwaukee, Ozaukee, Racine, Washington, and Waukesha Counties.