Assessing the Value of a Family Business in A Divorce

Managing family business

Lawyers sometimes refer to experts that their clients hire to analyze and explain complicated factual issues as “talking heads”. In cases involving high value marital property, talking heads are often a necessity.

Assessing the value of a family business in a divorce usually requires the opinion of a business valuation expert. If a husband and wife own a family construction business or a medical practice, valuing the business or practice is a complicated process. Experts must assign a value to these assets.  Assigning a value to a business, however, often includes valuing the assets that the business owns.

  • Construction companies own construction equipment, accounts receivable, the value of unperformed construction projects, and capital accounts maintained to replace hard assets.
  • Medical practices own similar types of assets.
  • Both types of enterprises may have “good will” in the community that is worth money.
  • Medical practices benefit from patient loyalty and the resulting referrals.

The value of a small company or professional practice may depend, in large measure, on the personality and drive of the spouse who is in charge. To come up with a fair value requires an expert with experience in the real world as well as in the courtroom. Such experts do not come cheaply. A decision to hire one and if so whom to hire should be made after thoughtful consultation with your lawyer. The cost of valuation should be weighed against the benefit to be gained in a division of the net result.