Valuing Business Wealth
Separating and negotiating divorce is stressful. There is so much to think about, and on top of it all, there is the added pressure of accepting a change in your financial cashflow.
First, you need to be taking care of your wellbeing, closely followed by acknowledging if you were an active or passive participant in your relationship finances.
If you were a passive participant, then while you need to be taking care of your wellbeing, you may need to think longer term, and whether financial information you may have access to now, will still be available to you, when you are ready to consider it.
When we value a business or a company, we need information. Generally, most parties to a relationship break-up are keen to move on, so for joint instructions information is shared freely. But, this isn't always the case.
What information do we consider when valuing a business?
Remuneration paid to each party, and to that of family members
Transactions which are unique or one off to the business, and cycles of the business
Investments, Property, or Plant, particularly those of high value, or not essential to the day to day operation of the business
Who the competitors are?
What is happening within the industry and economy in general?
What may be unique with the business?
Navigating Separate Wealth
On occasion we find couples have entered into a contracting out agreement, so our role is a little different. It generally involves working with you and your solicitor to identify an investigative path.
That path will often involve our accounting skills as opposed to our valuation skills. On occasion separate property may become joint property, this often comes down to a legal argument which your solicitor will be responsible for.
Our role as accountant and valuer is to help your solicitor identify potential sources of where separate property has or may have been used as relationship property, or that your spouse’s contribution has increased the value of the business or company.
When we are helping your legal team, we are likely to ask for more information and an understanding of:
Where the funds which were introduced to the company came from;
Where the drawings from the company were paid to; and
What each spouse contributed to the business, and whether they were paid a market wage.
Once we have this information, we then evaluate and discuss with your solicitor our observations and conclusions. It will be your solicitor who forms the opinion with respect to whether there is an argument that separate property has become joint property.
If you need help understanding your rights, please seek legal advice as soon as possible. If you need a valuer, please reach out to us.