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Dividing a small business during a divorce

An Arizona business owner going through a divorce may be concerned about how a split will affect their enterprise. Whether the business is owned by one spouse alone or jointly owned by both partners, it is important to have an accurate valuation of the company's worth before entering into divorce negotiations. In some cases, the business may be the largest single asset divided in the divorce. This may require looking at the current value as well as the potential for future expansion.

By ensuring that the company's valuation is accurate, divorcing spouses can help to verify that the settlement of their split will be equitable. A partner can either receive a buyout offer or make the same offer to the other spouse. This buyout amount will generally be based on the fair market value of the company. Depending on the context of the divorce, it may be important to have an accountant produce an independent appraisal. When one spouse is accusing the other of hiding assets, a forensic accountant can examine the financial records and uncover any issues.

In addition, there are a number of intangible factors to take into consideration, including the value of the firm's name and goodwill. Not all loans and liabilities may be on the books, especially if they involve money lent by friends or family. There may also be contracts with deferred payment plans that could add significant value.

The actual process of dividing the business will depend significantly on whether the business is in one spouse's name or is a partnership. Because Arizona is a community property state, spouses can have significant rights even to a solely owned business. A family law attorney can help a divorcing business owner protect assets and reach a fair settlement.

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