Assets & discretion
Business Valuation in a Divorce
If a business or shareholding belongs to the marital assets, its value must be determined for the equalisation of gains. The largest part of the dispute often turns on this value – so it should be established with corresponding care, because even small differences in the assumptions can decide significant sums.
The Essentials at a Glance
- The business value directly determines the size of the equalisation claim.
- Common is the capitalised-earnings method; for owner-driven businesses, the modified version.
- Often underestimated: a notional owner's salary, latent taxes and the right valuation date.
- The value of a practice or firm can fall into the equalisation too.
- A robust valuation usually requires expert support.
Why Valuation Is So Decisive
The assessed value directly determines the size of the equalisation claim. Even different assumptions or methods can lead to markedly different results – in both directions. An inflated valuation produces an excessive claim that can endanger the company's liquidity; an undervaluation gives away rightful claims.
That is why special care – and a critical eye on every report submitted – pays off here.
Valuation Methods
Valuation is usually by the capitalised-earnings method, which derives the value from sustainably achievable future earnings. For owner-driven businesses and professional practices, the modified capitalised-earnings method is often used, reflecting that much of the success depends on the owner personally. The pure asset value (the value of the individual assets less debts) often forms only a lower limit. Which method is appropriate depends on the individual case – industry, size and structure all play a part.
Owner's Salary, Latent Taxes, Valuation Date
Three points are particularly often underestimated:
- Notional owner's salary: the value is adjusted by a reasonable remuneration for the owner's own work – otherwise their personal effort would wrongly be counted as company value.
- Latent taxes: a notional sale tax is generally deducted, because a sale would be taxable.
- Valuation date: what counts is the value on the date of the final assets (service of the petition), not today.
Each of these can noticeably change the value – and the claim.
Neue Farben
For owner-led practices, value and person are intertwined – we separate what truly transfers.
Special Features for the Self-Employed
For doctors, lawyers, tax advisers and other professionals, the value is especially tied to the person. Here the notional owner's salary is central, and the "goodwill" (the transferable part of the practice value) must be separated from the purely personal element. A flat valuation often produces wrong results here – we ensure a sound valuation in line with the case law.
Appraisers and Tax Advisers
For a robust valuation we work, where sensible, with auditors, appraisers and tax advisers – and scrutinise the other side's reports critically on method, assumptions and date. The result is a value that withstands judicial review. Throughout, we keep the company's economic situation in view: an inflated but unrealistic value helps no one if it brings the business to its knees.
What to Watch For
In a business valuation, the quality of the assumptions decides the result. Make sure an appropriate owner's salary is deducted, that latent taxes are taken into account and that the right valuation date is used – mistakes at these three points move the result most. Don't accept a flat figure; ask for a transparent derivation. Be wary, too, of a valuation based solely on turnover or rough industry multiples: such rules of thumb often produce unrealistic values in the family-law context. The real leverage lies in questioning the valuation rather than simply accepting it – while keeping the company's economic situation in view.
How We Support You
We first get a picture of the business, the shareholding structure and the available documents. We then clarify the appropriate method, commission or accompany the valuation and scrutinise the other side's report on method, assumptions and date. On that basis we negotiate a fair payment while protecting the company's liquidity – in close coordination with appraisers and tax advisers.
Frequently Asked Questions
How is my company's value determined?
Usually by the (modified) capitalised-earnings method, as at a valuation date and adjusted for owner's salary and latent taxes.
Does today's value count or an earlier one?
The value on the date of the final assets – when the petition is served.
My success depends on me personally – does that count?
Yes. For owner-driven businesses a notional owner's salary reduces the value; the modified method reflects this.
Are taxes taken into account?
As a rule yes – through the deduction of latent taxes, because a notional sale would be taxable.
Can I submit a counter-valuation?
Yes. We scrutinise existing reports and, where needed, commission our own.
Who bears the cost of the valuation?
It depends on the proceedings. We discuss this with you before a report is commissioned.
Does my business partner have to be involved?
As a rule, no. We take care that co-shareholders stay out of it as far as possible.
How long does a valuation take?
Depending on size and data, from a few weeks to several months. Good preparation speeds it up.
What if the other side sets the value too high?
We scrutinise the assumptions critically and, where needed, set our own report against it – an inflated valuation otherwise leads to an inflated claim.
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