Why You may Need a Business Valuation Expert in Your New Jersey Divorce
When it comes to marital asset division in a New Jersey divorce, you may need help determining the value of a certain property, namely a business.
While bank accounts have defined values, other assets depend on various factors to arrive at a value. Take art collections, antique vehicles, and a family business, for example. Finding an objective value for any of these assets takes expertise in the field of art, antiques, finances, and marketing. To evaluate a business in divorce proceedings requires business analytical expertise. A business valuation expert has that expertise.
What’s the role of a business valuation expert?
First, they can determine the business’s fair value, whether the company is for sale or for income purposes for one or both parties. Then, with the cooperation of the business owner, a good business valuation expert can arrive at a defensible value for the business one spouse or both spouses own. The expert has depth and breadth of experience in a variety of industries and types of businesses.
When couples divorce, all the marital assets must be equitably divided, including a business. An equitable division includes considerations of the contribution of each party to the company. For example, one party may have run the business while the other worked outside the industry or stayed home to care for the couple’s children. Or both parties worked the business and have equal or unequal shares in the business proceeds. One or both may be shareholders, partners, or sole owners of the company. Many factors play into who gets the business and how much. The starting point, however, is how much the business is worth and whether it is marketable. Many professionals, like doctors, lawyers, acupuncturists, and other personal services providers, have businesses that depend on the individual provider for its worth. Without the specific person working in it, the company is not worth very much.
What’s taken into consideration when valuing a NJ business?
To evaluate a business, the business valuation expert examines all aspects of the business. They want to know about the company’s capitalization, expenses, receivables, inventory, assets, contracts, and management. To perform their job, the expert must have the proper education, experience, and credentials to certify they understand the intricacies of businesses and financial matters. They may attend a school that teaches financial and business valuation analysis, apprentice under other business evaluators, or undergo further training. To be competent to arrive at a defensible fair value of a business, and mainly to be credible in a court of law, the expert must have the requisite education and training.
Then, they must take a test to certify their knowledge and ability to be a business evaluator through the American Society of Appraisers, the National Association of Business Certified Valuation Analysts, The International Society of Business Appraisers, or the Institute of Business Appraisers. After certification, they maintain their credentials with continuing education. As their certification suggests, the range of their duties is expansive. For example, a business valuation expert may provide business valuations to divorcing parties and those who wish to acquire or merge with another business. In addition, they may supply financial opinions, reports for corporate mergers or acquisitions, financials for estate taxation and planning, and more. Their detailed reports weigh heavily in resolving many disputes or provide the basis for commercial sales and purchases.
How much does a business valuation cost in Passaic County?
Whether a business is simple or more complex, the value is critical for settling or trying a divorce case. A judge cannot value a business, nor can a divorcing spouse unless they are an expert. Often, family law attorneys know business valuators they work with regularly and can refer a professional to their client to ascertain the value of a marital business asset. The cost for such an evaluation may range from $500.00 to $50,000.00, depending on the business size and complexity. But paying for a highly qualified expert opinion on the value of a company may save you money or gain you a monetary advantage in the long run. A superior business valuation by an impeccable expert can help you get the maximum value of your interest in a business.
You want a business valuation expert with lots of experience to arrive at an accurate valuation and persuade a family law judge or jury of the weight and credibility of the expert’s opinion. Sometimes, dueling divorcing parties present two valuations, expecting the valuation to be higher or lower, depending on the desires of each party. For example, a spouse who operates the business may want their spouse to get less and look for a lower valuation, while the non-operating spouse wants their share to be higher. Each may supply the other party and the deciding judge a business valuation from their expert. The attorneys for each party may question the other party’s expert at a deposition under sworn testimony or at trial. Ultimately, the parties may decide on their own whose expert to believe, or a judge may determine what valuation to use or arrive at another value. If the differential between the two valuations is not enough to spend time and money on to challenge, the parties may split the difference and settle on the median value.
What can a NJ family law attorney do to help with business valuation experts in the divorce process?
While business valuation experts come up with fair value, a divorce and family law attorney most often provides the expert the details to consider. For instance, a partnership interest valuation may depend on a partnership agreement and what it includes. Some contracts do not allow a divorced party to maintain an interest in the partnership. Some limited liability companies and S corporations have similar restrictions on shareholdings. A family law attorney can give the expert background information pertinent to the valuation and work with experts they know the court accepts and respects.
Attorneys pointing you in the right direction for business value determinations in Northern New Jersey
If you are contemplating divorcing or are already involved in a divorce proceeding, you want to engage the services of a divorce attorney with long experience in divorces, litigation, and business divisions.
At The Montanari Law Group, LLC, our legal team has business valuation expert connections, understands business valuations, and knows how to cross-examine opposing party’s experts on the witness stand. Ideally, you want to avoid a battle of experts at trial, but an expert is often necessary to arrive at a divorce settlement also.
Conference with a skilled divorce lawyer at The Montanari Law Group, LLC, to learn more about how businesses are valued and what you can expect in your divorce proceedings. When you need advice and counsel on the road ahead in a divorce. We serve in places like Elmwood Park, Wallington, Hackensack, Wayne, West Orange, Nutley, Clifton, and Passaic.
To schedule a consultation with an experienced team member of our team to discuss your particular concerns, contact us online or call our Little Falls office today at (973) 233-4396 for an initial consultation.