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Business Valuation

With ever-changing economic conditions, one of the biggest challenges that divorcing spouses face is valuing their business. This is a particularly large challenge for spouses who don't realize that even if a business is in the name of just one spouse, it will be considered marital (and therefore belonging to both spouses) if it was purchased, improved on, or financed somehow during the marriage.

Indeed, since many businesses (especially small ones) qualify for one or all of these criteria, the issue of business valuation takes a front and center role during financial settlement negotiations and possible litigation.

The Risks of Improper Business Valuation

Considering how important finances are to quality of life, the risks of improper business valuation can be severe and devastating. And it's not just incompetent advice that can be costly; spouses can contribute to the problem, too. For example, the spouse who wasn't actively involved in the business may accept, without question, the business valuation estimate provided by the other spouse -- and this estimate can be staggeringly off-base (and, of course, in the estimating spouses favour).

Why does this happen? Unfortunately, it's often because the spouse receiving the estimate either doesn't know that they have every right to seek an independent business valuation, or they believe such a valuation would be too costly. Without question, in the overall sense, the costs of independent business valuation are a fraction of what could be lost or gained.

Your Family Lawyer May not Have the Expertise to Help You

Your family lawyer is a critical part of your Divorce team (a.k.a. the professionals who will help you through your Divorce). However, business valuation may simply be outside his or her area of expertise.

Cathleen Collinsworth is a Master Analyst in Financial Forensics (MAFF™) specializing in Business Valuation in Litigation, and will work with you and your family lawyer to create a precise, concise and objective business valuation -- one that ensures your Divorce financial settlement agreement reflects the real value of your business, and not merely your spouses "estimate."

Cathleen is also a Certified Divorce Financial Analyst (CDFA™), a MAFF™, and is qualified to provide expert witness testimony.