When a business owner is getting a divorce, determining the value of the business interest to include in the marital estate can be one of the most contentious and time-consuming issues. Rather than hire separate experts to duke it out in court, some spouses opt to hire one joint business valuation professional.
Benefits for Both Spouses
Here are some of the key advantages of hiring a joint expert:
Cost. Both parties jointly pay the retainer and any incremental fees out of marital funds.
Objectivity. The parties openly share financial information and disclose all business assets and income. The expert has all the information he or she needs to make an informed value conclusion.
Time. Joint experts streamline the process and save time. Allowing one expert to visit the facilities and interview management also disrupts daily business operations less than granting access to two experts.
Settlement. Spouses who hire a joint expert help facilitate the settlement process and may be less likely to wind up in court. The expert’s questions and concerns can be discussed at preliminary meetings with both spouses and their attorneys prior to issuance of the expert’s final valuation report.
The process is generally more collaborative when the parties share one valuation expert. And the likely result is a fair and reasonable valuation that’s acceptable to both parties. But there’s a hitch: It only works if the parties can agree to be honest and unemotional.
The use of joint experts isn’t always realistic. In some cases, the relationship between the spouses has become toxic. When one spouse or both spouses are unable to trust the other, it might be more prudent to hire separate experts that each spouse feels comfortable with. If there’s a major discrepancy between the experts’ conclusions, a third expert can help pinpoint the sources and help bridge the gap.
Endorsed by Family Courts
Family law courts often prefer the use of joint valuation experts. From a judge’s perspective, the use of a joint valuator eliminates the guesswork of deciding between two experts’ conclusions.
Streamlining the process makes more efficient use of the family court system. That’s why a few jurisdictions actually require joint appraisers in family law proceedings.
Selecting an Expert
If you decide to go this route, make sure the expert has worked on joint valuations before and is familiar with the process. It’s important that the expert understands the nuances of objectively working for both parties so the valuation isn’t contested or thrown out.
Business valuation in marital dissolution cases is highly state-specific. So it’s also important to hire a credentialed professional who’s familiar with the legal precedent in your jurisdiction. That way, you’re more likely to obtain an accurate valuation that includes (and excludes) the appropriate components of value in your marital estate.
Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.