Selecting A Business Valuation Expert For Your D
In a typical divorce, most people understand that property and assets such as houses, jewelry, and financial accounts are divided between spouses. However, if a marriage involves ownership of a business, the division of the parties’ respective ownership interests in that business also become a fiercely contested issue.
Dividing a business in a divorce gained tremendous attention when Amazon founder and CEO Jeff Bezos and his wife MacKenzie Bezos announced their divorce earlier this year. Undoubtedly, the Bezos divorce involved complex issues regarding the valuation of their business interests in Amazon, requiring the expert services of a business valuation expert. This article examines crucial considerations when selecting a business valuation expert in a divorce.
Dividing Businesses in a Divorce
When issues regarding the community property interests in a business arise in divorce, the court is required to characterize it as either community or separate property and determine the practicality of dividing any community interest in it. Demonstrating that a business is a spouse’s separate property requires proof that the business was acquired or started either before marriage or using separate property capital.
Dividing community interests in a business often requires an examination of its historical growth. This may necessitate establishing a timeline of the business’ value and conducting a sophisticated analysis of individual transactions and assets.
Major Considerations for Selecting a Business Valuation Expert
Mistakes in the valuation of your business can cost you a substantial amount of money in your divorce. Therefore, the importance of selecting a reputable and reliable business valuation expert cannot be exaggerated.
When selecting a business appraiser, you should consider the following factors:
- Reputation – a good business valuation expert should have an established reputation in their field and among the legal community. An appraiser should have a good reputation with the court and opposing counsel to minimize the likelihood that their conclusions will be challenged.
- Knowledge – a reliable business appraiser should have a demonstrated comprehension of how the law will affect the valuation of your business.
- Experience – an effective business valuation expert should have comprehensive experience in appraising businesses in the context of divorces, covering businesses of varying degrees of sizes and complexity in operations. At a minimum, your expert should have experience evaluating the type of business you own.
- Communication ability – your appraiser should have the ability to relay their conclusion to you effectively. For example, a competent business appraiser should be able to simplify critical issues in a way that is easily digestible for your understanding. Their ability to extricate themselves from technical jargon to communicate complex concepts to you and the judge will be invaluable to your cause.
