Business Valuation and Divorce in Tennessee

A trusted Nashville family law attorney protects what you built

The process of asset division seems simple on its face – inventory the assets and then divide them equitably between the two parties. However, when a business or private practice is involved, the value of that business must be determined before the assets can be divided. Business valuation is a challenging task when each party has so much at stake. At the law firm of Miller Upshaw Family Law, PLLC, we have more than 50 years of cumulative experience guiding our clients through the often harrowing process of a complex divorce. We will help you to navigate the challenges as you carve out a new life after divorce.

Valuing a business for the purposes of a divorce settlement

Whether you are the spouse who owns the business, or the other spouse who is waiting to hear what the final number is for business’s value, the process of business valuation can be nerve-wracking. There are different approaches for valuing various types of businesses, from sole proprietorships to professional practice, general partnerships and corporations. For example, in a family-owned, closely held business it can be challenging to determine its value because the major share of the business is owned by the family.

According to IRS guidelines the business value estimate is based on the price at which the business would sell between a willing buyer and a willing seller at the fair market value. Some of the criteria that the IRS might use to value a closely held business includes:

  • History of the business
  • Current economic outlook
  • Earning capacity of the business
  • Book value of the business (balance sheet)
  • Dividend-paying capacity
  • Goodwill

The concept of goodwill can actually become a sticky wicket in the case of a professional practice whose level of success is inextricably tied up in both the personal goodwill of the business owner, and the professional goodwill of the company and its brand. Some courts have ruled that goodwill is not a marital asset that can be divided.

Avoiding the danger of “double dipping” in business valuation, asset division and alimony

The concept of double dipping or double counting refers to the practice of counting a marital asset twice – once in the property division process and again in the spousal support award calculations. The basic premise of this theory is that the same income is counted twice, putting the business owning spouse at a disadvantage. A close examination of the business valuation methodology on both sides will ensure a fair valuation of the business for the purposes of equitable distribution and any alimony award that might be appropriate.

Our role as Nashville complex divorce attorneys

Our job as Tennessee complex divorce attorneys is to help you navigate the often frustrating process of business valuation and asset division. Whether you happen to be the business-owning spouse or the other spouse we will explain in detail the consequences of the options available to you.

If you are dealing with a complex, high-asset divorce you need an attorney that you can rely on to understand the complexities of Tennessee matrimonial law and one who has access to the highest caliber business valuation experts and forensic accountants. We have the negotiating skills, the experience in solving complex disputes and the determination to guard your interests.

Consult with an experienced team of Nashville divorce attorneys

At the law firm of Miller Upshaw Family Law, PLLC our goal is to relieve the stress of a complicated divorce by shouldering the legal burden for our clients in the Nashville area. Call us today at 615-391-4200 or contact us online to schedule an in-person or video consultation with an experienced attorney.