Marital Dissolution

Marital Dissolution, unfortunately, statistics show that about 50% of marriages end in divorce. The owner of a business might like to have an idea of what it would cost to get divorced.

The statutes governing valuing businesses for marital dissolution vary from state to state. Unfortunately, they tend to be vague regarding criteria for valuation, so the business appraiser must look to the case law that establishes relevant precedent for standards and criteria for valuing a business for marital dissolution in that particular jurisdiction.

It is common for the nonoperating spouse to think that the business is worth more than the operating spouse thinks it is. Sometimes the ratio exceeds ten to one. Unfortunately, most family law judges have little expertise or experience in business valuation, so when there is a dispute over the value of the business in a divorce, it pays to retain the best possible business appraiser who can convincingly educate the judge.

Most states these days distinguish between enterprise goodwill (that which arises form the business itself and thus is transferable in a sale) and personal goodwill (that which arises from the operating spouse's talents and efforts). In a divorce, in most states, the portion of value attributed to enterprise goodwill is part of the marital estate and the portion attributed to personal goodwill is excluded from the marital estate. The separation of enterprise and personal goodwill can significantly affect the value of the business for marital dissolution.