Closely-Held “Small” Business Division Divorce Law | Oregon Business Valuations - Arnold Law in Eugene, Oregon – Powerful Advocacy. Proven Results.

Closely-Held “Small” Business Division Divorce Law | Oregon Business Valuations

12.10.2015 – by Adam Shelton, Eugene Divorce Attorney

One of the single most difficult areas for attorneys in Oregon divorce law involves the issues surrounding a family business. Is it part of the marital estate? How much of it is? Can it be valuated? Just what appreciated during the divorce? What is it worth (its present value versus value at the beginning of the marriage)? If it is part of the marital estate, how is it divided in the divorce? Is it bought out? Are shares transferred? Is there an equalizing judgment in favor of the non-owner? How is that paid? Over what period via what terms? Can a prior business attorney still represent both of the parties? These answers are all complicated and lead to other questions within the context of an Oregon divorce.

Business Valuations in Oregon Divorces

Most of these answers begin with a business valuation. A business valuation is the process by which an expert looks at cash flow and assets/liabilities of a company to determine its fair market value if a qualified buyer were to purchase the company at the time of the valuation. Courts in Oregon generally accept the definition of “Fair Market Value” as “[…} the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.” Sometimes, this expert is retained jointly, but other times, each party retains their own expert valuator.

Divorce

Some of the many techniques that the business valuator may use to make the determination:

– Analysis Multiples Method
– Income Cash Flow or Discounted Cash Flow (DCF)
– Comparable Transactions Method
– Market Valuation
– Net Adjusted Asset
– “Excess earnings” Method

Many attorneys fail to recognize that good will in a business is not often transferred to a potential buyer. Take a trial law firm for an example. Do you hire the “name” because of its good will or do you hire the law firm because of specific individuals? If those individuals left the law firm, would the value of the firm be the same? In essence, all you are purchasing with a law firm is a client list, a present-day book of business that may or may not stay, and personal property.

It is crucial for your Oregon divorce lawyer to be familiar with these different business valuation methods. Your attorney must be competent to adequately communicate to your expert and to conduct discovery under the Oregon Rules of Civil Procedure to properly get the expert the information he needs.  Also, an expertise in these methods is necessary for trial and cross-examination.

[How do you measure the value of an Oregon business during a divorce?]

[How do you measure the value of an Oregon business during a divorce?]

Hiring a Eugene Divorce Lawyer for Oregon Business Disputes

The Eugene divorce attorneys of Arnold Law have the experience, expertise and willingness to travel statewide for high-asset divorce. In many of the smaller counties, the local divorce lawyers may not have the breadth of knowledge to assist in small business cases where a company’s value and marital status is to be determined for a divorce.

For more information, call 541-338-9111 or fill out the form to the left or the live chat to the right.

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To read more about the issues in an Oregon divorce, click here.

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