Small Business Valuation In Divorce

Equitable distribution is typically one of the most complicated and involved aspects of a divorce in New Jersey, and the proceedings can become more complicated if the parties have to begin the process of determining the value of a small business. Going through a divorce in New Jersey can be difficult on all involved, including business partners of the divorcing business owner. This becomes especially true during the equitable distribution phase, which requires the parties to value and divide property and assets. During this phase, emotions can run high and the stress can be overwhelming. In the case of Rothman v. Rothman, the New Jersey Superior Court framed the elements for the valuation of a business for equitable distribution in divorce cases. The New Jersey courts are to consider and identify: 1) the assets of both parties; 2) value the assets of the parties; 3) determine how the assets are to be divided. A small business will generally be valued by a court-appointed forensic accountant or professionals retained either jointly or independently by the parties. When there is more than one evaluation, the values provided often differ substantially. During the discovery phase of the divorce, each party will have to provide information pertaining to his or her interest in the business. If some of this business information is confidential or proprietary, the parties can execute a confidentiality agreement to protect this information from reaching the public. The accounting and record books of the business will be analyzed and evaluated by the forensic accountant as well as by each party's lawyer. In addition, depositions will most likely be taken with the parties and anyone else that has information regarding the business that may be important to the valuation process. In many cases, one party has very little knowledge regarding the other party's business, especially if he or she was never involved with it. Throughout the valuation process and during discovery, all parties to the divorce should be made knowledgeable about all aspects of the business If you have questions regarding a small business divorce or the process of equitable distribution in New Jersey it is advised that you consult with an attorney with experience in this area of the law. For more information on small business divorce, equitable distribution, or other Family Law matters in New Jersey visit NJCivilUnionLaw.com and HeatherDarlingLawyer.com. This blog is for informational purposes and in no way intended to replace the advice of an attorney