Timing for a Divorce Valuation
Divorce can be challenging, especially when it involves dividing a shared business. Sorting out the business’s value and ownership only adds to the stress. One of the best ways to simplify this process is to receive a business valuation. However, it is crucial to choose the right timing for a divorce valuation to achieve the best outcome. Receiving a business valuation at the right moment can save time, money, and conflict. In this article, we discuss when to obtain a business valuation for a divorce and how to use it effectively.
As a professional business appraiser, Peak Business Valuation regularly conducts divorce business appraisals. We can provide the data needed for fair dissolution and answer any questions you may have. Schedule a free consultation with Peak Business Valuation today to get started!
When to Obtain a Business Valuation for Divorce
Business owners can choose to obtain a business valuation for divorce at various points in time. Each period has a certain relevance for different stages of the divorce. Below, we list some of the most common times to receive a divorce business valuation and why:
- Time of Separation: This option means valuing the business as soon as the relationship ends. In some cases, both partners may still be co-managing the company. Valuing the business at the time of separation provides an objective view of the business’s value before major changes can take place.
- Time of Divorce Filing: Using the divorce filing date provides courts a clear legal point in time for separating assets. Any assets and debts gained after the time of divorce filing are divided and allotted to the appropriate party. Moreover, some courts default to valuing the business on this date.
- During Divorce Proceedings: Drawn-out divorce cases may benefit from a current update of the company’s value. A business valuation conducted late in the process may reflect performance or value changes influenced by the divorce.
- Time of Settlement or Trial: A business appraisal at this stage reflects the business’s value at the date of resolution. This option may be necessary due to market changes or a prolonged divorce.
Multiple valuations may be needed during divorce, such as at separation and settlement. This can capture major value changes or address claims of manipulation. In general, it is best to obtain a divorce business valuation as soon as possible. As such, the time of divorce filing is ideal for most cases. See Litigation Valuation for Divorce for more information.
Why is it Important to get a Business Valuation Early in Divorce?
Getting a business valuation early in divorce helps guide key decisions throughout divorce proceedings. Each marriage separation calls for a different solution—selling the business, buying out a spouse’s share, or liquidating it. A timely divorce valuation gives both parties more time to weigh their options and avoid costly mistakes.
Timing also plays a critical role in the valuation itself. Valuing the business at the time of divorce filing offers a clear legal benchmark for courts to rely on. It also captures the company’s worth before either party can influence it. An early valuation equips both spouses with reliable information for negotiations or a trial. Still, external factors like state laws or financial volatility may affect the ideal timing.
To determine the best timing for a divorce valuation, contact Peak Business Valuation. We are here to answer your questions on valuing a business for divorce. Schedule a free consultation with Peak Business Valuation today!
Navigating Ownership and Division in Divorce
Moreover, there are many factors that can affect your business valuation divorce. One spouse may own the business individually, or both may share ownership. Assets may have been acquired separately or grown together as marital assets. Determining who has ownership over what can be difficult. Thus, different solutions may be necessary depending on the circumstances. Below, we highlight two common options for resolving a divorce case: mediation and litigation.
Mediation
Mediation helps both individuals come to a mutual agreement without a court. A mediator listens to both parties and suggests fair solutions. Peak Business Valuation often assists clients seeking mediation in divorce cases. A divorce business valuation clarifies the company’s value, reducing conflicts. Early business valuations streamline mediation and may prevent litigation.
Litigation
Litigation is the process of relying on a court and a judge to determine the outcome of the divorce. The judge decides the division of assets. Both parties present business valuations, and the judge decides on a fair solution. Oftentimes, one attorney aims to increase the company’s value, while the other seeks to reduce it. A spouse may also hire a forensic accountant to review the business’s financial history. Be sure to read Receiving a Business Valuation Early in Divorce to learn more. At Peak Business Valuation, we can act as an expert witness for divorce proceedings to aid in supporting an independent divorce business valuation.
Conclusion
Receiving a business valuation early in divorce is useful for several reasons. First, it minimizes conflict over the company’s worth and financials. When both parties can agree on a value early, it limits the likelihood of prolonged disputes that could lead to litigation. The business appraisal also gives both parties clear facts to promote cooperation and compromise. Thus, determining the timing for a divorce valuation is critical.
Peak Business Valuation regularly provides business valuations for divorce and litigation. If you are seeking a business valuation for divorce, schedule a free consultation with Peak Business Valuation! We are happy to help answer questions and provide expert testimony. See The Importance of a Business Valuation for Divorce and Litigation Valuation for Marital/Partnership Dissolutions to dive deeper.
