Especially in a situation where a spouse has not been involved in the operation of the business or the acquisition of assets, the non-involved spouse must ensure that he/she has all the information regarding the assets. To assist with this, our firm does a lot of discovery, request for production of documents, will hire forensic accountants and business appraisers, and other experts that can review the operation of the family business.
Your divorce attorney may recommend bringing in a an expert – a business valuator or forensic account, for instance – if necessary to assess the business and ascertain value. You are literally hiring somebody to go to that business, sit down with the other side, and have them explain how the business operates. Your expert will look at the profit-and-loss statements, the tax returns, cash flow, receivables, and cash payables.
Make sure you understand what you’re trying to get out of the divorce. Realistically, if you have not been very involved in the business during the marriage, then you are unlikely to be very involved in the business post-divorce. Rather than asking for a percentage of ownership in the business post-divorce, you should consider getting bought-out with cash or other assets of equal value to your portion of the business.
I just finished a case where we had multiple business entities. My client had never really been involved in the accounting practices of these multiple entities, and she was facing a situation where she would have to maintain a partnership interest and several limited partnerships – even though she didn’t have any knowledge about the business.
From a trust standpoint, she wasn’t comfortable with having her ex-husband continue to run the businesses in which she still held a partnership stake, so we stipulated that her ex had to bring in another party to operate and manage the accounting of those businesses.
In this situation, we had to create a new partnership agreement as well as a divorce agreement.