Considerations for Dividing a Business in a High Asset Divorce

 Posted on January 31, 2020 in Family Businesses

Divorce involving business owners can be particularly complicated, especially in an Austin high asset divorces. When one or both of the spouses own a business, the division of community property can become extremely complex. The following are just a few special considerations for dividing a business in a high asset divorce. If you have questions or need assistance, you should get in touch with an Austin high net worth divorce lawyer as soon as you can.

Business Appraisals Are Extremely Complicated and Should Be Done Early

Chances are good that much (if not all) of your interests in a business will be classified as community property and will be subject to distribution. Sometimes spouses own a business together, while in other scenarios only one of the spouses is involved in a business. In either circumstance, it will be essential to have a proper business appraisal done to ensure that the court knows precisely how much your business (or business interests) are worth when determining how to divide community property.

Business appraisals are extremely complex and require the skills of an experienced business appraiser. A business appraiser can complete different types of business appraisals, including those for the purposes of selling the business and those for the purposes of identifying the value of a business in a divorce. Businesses can be valued in various ways, as well. For example, a business appraiser can provide a fair market value, which can take into account all intangible assets of the business as well as tangible assets (like equipment and furniture). A fair market value provides a number that reflects what the business might sell for. You can also consider a capitalization of earnings valuation which attempts to calculate the “net present value” of the business based on “its projected future earnings.” In addition to appraising the business, you may also need a valuation of your business stock.

The key is recognizing that business appraisals are extremely complicated, especially for a high-earning business. As such, you should begin planning for them as early as possible in your divorce.

Buyouts and Leaving Your Business

You may need to consider leaving your business and getting bought out so that all community property can be distributed according to Texas law. Whether your business is a partnership with a partnership agreement, an LLC that operates according to an operating agreement, or a corporation with by-laws, the document governing your business should specify terms for a buyout. You should always work with your lawyer throughout this process.

You May Need to Dissolve Your Business

Depending upon what type of business you currently own, there are different procedures under Texas law for dissolving your business. Typically, a divorce will only result in the dissolution of a business when the spouses own a business together and neither wants to continue running it after the divorce. Otherwise, a buyout is usually possible (as long as there is an interested party or parties, or as long as other partners, members, or shareholders are willing to do a buyout). In short, depending on your circumstances, dissolving your business may need to happen as a result of the divorce.

Contact a Texas High Asset Divorce Lawyer

Business issues in a high asset divorce can be incredibly complicated, and you should always have an experienced Austin high asset divorce attorney with experience handling matters similar to your own. Contact Powers Kerr & Rashidi, PLLC online or call us at 512-610-6199 for more information about how we can assist with your high asset divorce.

Source:

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.6.htm