Two years ago, I bought a business with two other partners. The business rocks along as it should, even with COVID. Now I think I am going to be going through a divorce. How will my one-third interest in the business be valued? I am not related to my two partners. This scenario scares me.
Business valuation can be tricky in equitable distribution (divorce property division). Usually, your attorney helps you find an expert with credentials in business valuation. Because you are not related to your partners, a new case deals with divorce business valuation when there is an arm’s length transaction in the shares of the business – Logue v. Logue. The Logue case holds that the court should consider the price at which the company sold if the sale was between unrelated parties. The Logue case is on appeal to the North Carolina Supreme Court.
Your business will be valued at your date of separation at fair market value. The purchase price for the business should be influential, according to the Logue case. You should hire a professional business valuator with a business valuation credential such as CVA, ABV or ASA. A CPA without a business valuation should be avoided.
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