Why Collaborative Divorce is Better for your Business

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A common concern expressed by business owners going through a divorce is that if they have to pay out their spouse for half the value of the business, it will destroy the business, and kill the income-generating asset that they had hoped would support the family. The proverbial “killing the goose that lays the golden egg”. Collaborative Divorce is better for your business because it is meant to address these concerns.

Furthermore, in a strict legal analysis, if the business was acquired during marriage, half the value of the business is shareable with your spouse. If you were to take your case to court, your lawyer would hire a chartered business valuator to do a comprehensive business valuation and would provide to the court, an expert opinion report regarding the value of the business. Your spouse would hire a different chartered business valuator to provide a similar report and you would have the battle of the experts, in front of a judge who would then decide what the value of the business is, and provide a court order relating to how the business will be dealt with.

Calgary Divorce Lawyer discussing Collaborative Divorce

Dividing your Business in a Collaborative Model

When we are looking at how you can divide the business in a collaborative model, your collaborative lawyers will explain to you your options regarding business valuations.

An option that is open to a couple, is to retain one neutral chartered business valuator, who can provide a valuation that is not the formal legal opinion report that would be necessary for a court determination. The cost of this less formal valuation is lower. For example, I have seen full legal opinion reports done by a chartered business valuator cost $20,000 or more. Whereas a less formal valuation of the same business would cost $10,000. The less formal business valuation is helpful to inform your settlement negotiations.

Why Choose Collaborative Divorce?

In a collaborative divorce, we identify what your hopes and concerns are relating to the business. We address the concern of specifically not having a matrimonial settlement that would in effect “kill the goose that lays the golden egg”. With a collaborative case, there’s more flexibility involved – a neutral chartered business valuator can assist everyone involved to understand not only the value of the business, but specific aspects of the business. For example, a business may specifically have a history of functioning with low debt financing. This is important information for everyone to know. When generating options this information is critical to take into consideration when we are considering how we might want to assist a couple structure a settlement.

Chartered business valuators also serve as an information source regarding options that might be available to a divorcing couple to reach their objective of not “killing the goose that lays the golden eggs.” The objective of the collaborative lawyers and the chartered business valuator is not only to ensure the divorcing couple understands the potential value of the business from a legal model, but assist them with finding a workable option in the overall matrimonial property division.

For reasons indicated above, the cost of a collaborative divorce is less expensive than a traditional divorce model. In addition to price, there’s a difference in experience that comes with a collaborative divorce. When assets such as a business is on the negotiating table, a spouse may be understandably territorial if that spouse’s lifetime career is wrapped up in the business.

In collaborative negotiations, a person can say at the outset, “It’s important that I stay actively involved in the business and keep the business intact,” and the negotiations can start with that goal in mind, and at the same time address the hopes and concerns of both spouses as they look at dividing out their property. In a courtroom divorce, there won’t be the same level of flexibility and control in the decision – it’s for the judge to decide. A collaborative divorce often saves money, and time, but more importantly helps a couple achieve a settlement that addresses what is most important to them.

Achieve a Fair, Respectful, Sensible Divorce.

Book a consultation with McNeill Family Law to get professional advice and guidance throughout your divorce. 

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