Valuing and dividing a business during divorce

Business owners in Pennsylvania who are considering divorce should keep in mind that it might be necessary to distribute the value of the business between themselves and their spouse. The first steps will be to decide how to value the business and to hire a valuation analyst.

The couple will have two choices for valuation. One, a full valuation, is the most thorough and accurate, but it is also more expensive and takes more time. The other is a calculation of value. Cheaper and faster, it might be less precise than the full valuation.

A judge, an arbitrator or another third party might need a full valuation. However, if the couple is in mediation or otherwise negotiating more informally, a calculation of value might serve their purposes. One exception may be if the business is particularly complex. In this instance, a full valuation may be needed regardless of other circumstances.

Once the couple has a sense of the company's worth, other factors might come into play. For example, the person who does not own the business might have signed a prenuptial agreement limiting their claim on the business. The spouse who is not the owner might have made significant contributions to the business by working there, supporting their spouse or in some other way. One important consideration for the spouse who is not the owner may be financial security. They may want to avoid being rushed through a calculation of value or the divorce process or pressured into giving up what they feel is their rightful share. Another complication might arise if the two owned the business together. If the couple can manage to continue working together, they might choose this solution. They might also want to sell the business and split the proceeds.

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