Don Sinkov of YourDivorceMediator.com explains why business valuations are so important.How often have I heard, “I have a business but I don’t want to spend the money to get it valued. It’s way too expensive. I’ve heard it costs $20-30,000.” During the settlement negotiations, when one spouse has a business or the spouses are partners in the business, it is very important to get the business valued. We need this to determine:

  • What each other’s interests are in the business
  • What is the marital interest to the non-titled spouse (the person that is married to the business owner)

In the old days, business valuations were exorbitantly expensive, so couples were hesitant about getting it valued because of the cost. This meant there were a lot of really bad deals made. Instead of getting the business valued, they made up an arbitrary dollar value or created their own valuation formula. Now it is possible to get a much less elaborate valuation for a much lower cost, but which contains all the important information and gives you the marital interest. Now you have the information. Now you can make an intelligent decision.

Accountants that specialize in business valuations like Steve Linker from Long Island, are highly competent in coming up with accurate values. Way too complicated for us lay people, but to them, it’s just another day at the office. Even the current reduced cost of business valuations to some people sounds like too much money to spend.  Entering into a deal where you don’t know the dollar value of the business is a mistake. This could be the largest asset that you have, but unless you get it valued, you won’t know.

Clients that don’t follow the recommendations from their mediators to get more information before making an important decision like a business valuation, often end up with buyer’s remorse. Then comes the phone call from your friend who says that because they got a business valuation done, their share of the business turned out to be an amount far greater than what they had anticipated. Before the valuation, they might have been willing to settle for substantially less.

By now I think you are getting the message. Spend the money. Get the business valued. In general, get all the information about your assets together, so you can negotiate intelligently, backed by all the facts. It is painful to negotiate, so many people want to rush through the settlement agreement and be done with it.

Take your time.  Be smart.  Don’t end up with buyer’s remorse.

Don Sinkov

Don Sinkov
Your Divorce Mediator
Westchester County, NY
Putnam County, NY
Phone: (914) 588-6258
eMail: Info@YourDivorceMediator.com