As divorce attorneys in Denver, we deal with various issues in any case. This can include issues related to children, property, financial support, and more. Not all cases are the same. One of the significant issues that can arise in a divorce is the division of property. In most cases, the property to be divided consists of a home, retirement and bank accounts, vehicles, investment accounts, or the furniture and pots and pans. However, there are families or parties to a divorce case who own businesses or business interests. As part of our divorce practice, experienced family law attorneys at Plog & Stein assist with the valuation and division of business assets as well.
Colorado business interests come in all shapes and sizes. A person may own a large business, such as a chain of restaurants or a car dealership. A person may own a small business, such as a one person accounting firm or a mom-and-pop laundry mat. A person might also own a fraction or portion of a business, without owning the whole entity outright. In a Colorado divorce setting, a business, or interest in a business, is generally considered property. As property, the same principles for dividing other assets apply. Property acquired during the marriage, absent a limited exception, is marital. Increases in value during the marriage to property acquired prior to marriage are considered marital in nature. Titling on property determined to be marital does not matter and said property can be divided by the court regardless of whose name it is in.
Prior to arriving at the actual division of a marital business asset, the parties must determine the value of a business. Contrary to popular belief, the value of any business is more that just looking at the assets/property and debt to arrive at a value from a balance sheet approach. Though this can be one facet of a business valuation, there is much more to the equation generally accepted by attorneys and courts in a Colorado divorce case. Beyond assessing assets and liabilities, a business valuation will entail an assessment of current and historical revenues and profits. This analysis also ties into the term "good will," which can be quantified into an actual dollar figure. We have seen cases in which there may be a two person professional operation in which one party or the other will say, "There's no value to the business; I am the business." Of course, this will be a statement made by a husband or wife who actually runs or owns the business. Conversely, the other party may find it meritorious to look into whether even a small business has value for asset division purposes. As part of the process, business valuators can also determine historical values, such as the value at the time of marriage or acquisition, as well as the current fair market value.