When two people go through a divorce, it is common practice for a pool of assets to be distributed between the parties. If one was the breadwinner and had a more sizeable estate, then some of these assets may be given to the other party through mutual consent or court order. Yet this process can often be complex and especially if a business of some kind is involved. Is it possible to include a business in asset distribution or is it a separate entity in and of itself?
Shareholdings
While many businesses may well be limited companies from a legal point of view, they will have shareholders. Consequently, those shares are seen as a personal asset and can certainly be included in a calculation like this. Sometimes, both of the adults were shareholders and often they may have an equal footing. At other times, one of them may have been a minority shareholder and may want the value of the business to be considered by the legal team.
Property Assessment
Australian law may recognise a business as property when it comes to family law disputes, although the situation is far from cut and dried. To come up with a solution, it may be necessary to value the business independently and to bring in a third-party expert to do so.
Valuing a Business
There are many different ways to generate such a valuation. You may choose to look at the bottom line figure on the balance sheet, which is often known as "shareholders funds." This is essentially what is left over when all liabilities have been paid off, and only the assets remain. However, this figure needs to be taken with a grain of salt, as it is not always easy to realise good value for assets, and especially if the business is to be closed down. Often, a business is worth far more on the open market if it has a strong order book, and those involved might be better served by retaining their shares.
Getting the Right Advice
It is very unusual, therefore, for any judge to rule that the business should be sold off to settle any family law dispute. It's nevertheless important, though, for those involved to get appropriate legal counsel. So if you are in this position, you should definitely get in touch with a lawyer who has experience in both business matters and family law.
