Determining the value of a privately held business during divorce is one of the most challenging, time-consuming, and costly aspects of dividing financial assets—especially in uncertain times like 2020, when COVID-19 revealed both vulnerabilities and unexpected opportunities for many businesses. A qualified business valuation expert plays a critical role in appraising these assets and requires detailed documentation to do so accurately.
Before hiring a valuation expert, it’s helpful to gather the following:
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Signed subscription/acquisition agreements and offering documents
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Copies of share certificates and how shares are titled (e.g., individually, jointly, or in trust)
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Details about the type of shares (corporation stock, partnership, or LLC interests)
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Any recent 409A valuations or year-end reports
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Operating agreements, articles of incorporation, or by-laws
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Shareholder agreements and records from recent capital raises
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Capitalization table and ownership percentages
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Purchase price and date of acquisition
A CPA with business valuation experience, or an expert with designations such as Accredited Valuation Analyst (AVA) or Certified Valuation Analyst (CVA), can help evaluate these documents. Since there’s no actual sale taking place, valuations can vary based on market conditions and the assumptions used—making these reports a starting point rather than a definitive answer.
When couples disagree on a business’s value, motivations can differ: one spouse may argue for a lower value to receive more assets elsewhere, while the other pushes for a higher value to reduce the other’s share. In some cases, co-ownership through a shared partnership post-divorce may be a viable solution. An attorney or valuation expert can help design the right structure for complex or unique cases.
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. This material is for general informational purposes only and is not tailored to the needs of any specific individual. Any discussion of U.S. tax matters should not be construed as tax-related advice. Please consult your personal tax advisor for more information. © 2020 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.