Atlanta Divorce Attorney | Atlanta Family Lawyer

Businesses and Divorce - Unlike professional licenses, a business is an asset subject to division in a divorce, to the extent a business is marital property. There are a whole swarth of issues that arise, most of these can be summed up as determining what portion of the business is marital, and what portion is non-marital, and how much is the business worth. Do not try to handle these issues without an experienced attorney who handles these issues on a daily basis. That is what we do at Shaw Law Firm, and I do not exaggerate the importance of these issues.
- Determining what portion of a business is marital or non-marital can be a complex task, and even when it is clear cut, there are still often many strategies that can be used to either maximize or minimize what is awarded to the other spouse.
  - There are many examples, but just as an example, I recall one case where my client (the wife in this case) inherited a business from her parents (20 years ago). She married her husband at just about that time. Her husband became the president of the business (in name only), and my client was nearly at her wits end as he was demanding a large award for the value of the business, enough that might break the business she inherited from her family. It just did not seem right or fair. But my client's original attorney had no clue as to how to handle the issue.
    - We knew immediately how to handle it as we took the case over mid-way through. We retained an expert with whom we had worked with on numerous occasions, and who had experience in court with us, and we got creative. We went back 25 years in business records, and had the business valued back to the date of marriage (which was 20 years). We then had the business valued at the date of the parties' separation. There seemed to be a substantial value.
    - But instead of stopping there, we applied the inflation rate. We argued at trial that the husband's misconduct while president of the business actually resulted in lost business value, after taking into account inflation.
    - The husband went from demanding six figures to being awarded $25,000 for 20 years of work as the president of the business.
- Valuation of a business requires expertise, and business knowledge, and is not something that just any attorney is likely to be fluent. A minority discount can be significant and needs to be accounted for, professional good will needs to be distinguished from personal good will, whether to use the market approach, income approach, or asset approach to value the business, how to derive the discount rate, to account for liabilities (many of which may be owed to family members), how to adjust for distortions that result from insider transactions (e.g. paying sweetheart deals to family members, or family members working for free artificially increasing the profits of a business), how to take into account different business formation, alienation restrictions, change of control provisions, specific industry practices and characteristics the impact the fair market value of a business, technological obsolescence, capital requirements, buy or start decision-making factors, key person discounts, change of control provisions, non-compete, asset tracing, balance sheet evaluation, and a whole host of issues too numerous to name.
- The understanding of such issues are essential to working with business appraisers and to creatively effectuating strategies. As an example, what if you are the key person in the business. What if your spouse wants the business? What if you decide to give the business to her, but decide you want to set-up shop across the street the next day after the divorce, and invite all your former clients to follow you. Can your spouse demand a non-compete from the court even if you don't agree to it?
  - We presently have a case just like this, and it is an issue that the business appraiser did not see. If the husband can simply walk away from the business, and set up shop the next day, isn't nearly all the business, except for the residual and the office assets simply then personal goodwill, and personal good will is not divisible in divorce.
  - I'll let you know how it comes out, but we certainly are not going to settle the case offering my client's spouse a lucrative value on the business when we have this issue to argue, and likely succeed on.
- These are things we deal with on a daily basis at Shaw Law Firm, and not something that should probably be trusted to an attorney who does not work with such issues and with complex asset issues in divorce on a daily basis as we do at Shaw Law Firm.

Business and Divorce