Valuing businesses in divorce during the COVID-19 crisis
The COVID-19 crisis is affecting many aspects of divorce, here we look at how solicitors and accountants are dealing with business valuations.
When a divorcing couple are looking to divide their material assets and one of them owns or has shares in a business, it is usually standard practice to value the business in order to determine how much the spouse’s interest in that business is worth.
Depending on the nature and size of the business, an independent valuer or forensic accountant may be called in to produce the valuation. However the impact of the COVID-19 crisis has affected all businesses of all sizes in respect of their value, liquidity and earnings.
Some couples may have already had a valuation done and are now wondering whether it needs updating. Others may have been about to start the process and are now pausing to see how the crisis plays out There are no easy answers especially given that there will also be those businesses out there who are doing better in this crisis than they normally would do.
Many forensic accountants and valuers have started to see businesses fall broadly into five categories, namely:
- Businesses which appear unaffected by the crisis;
- Businesses who are still trading but are doing so on a reduced scale and with the benefit of government help:
- Businesses who are benefiting from the crisis;
- Businesses which are temporarily closed but are confident they can resume trading when the lock down ends; and
- Businesses which are unlikely to survive or are already facing insolvency.
It is likely that each case will need to be considered on its own merits so if you are considering or experiencing a relationship breakdown and you are worried about achieving a fair share of a business asset, make sure you take comprehensive legal advice from our experienced family and business service teams at Barker Gotelee.
Amanda Erskine is a solicitor in the Family department at Barker Gotelee Solicitors in Ipswich.
Suffolk Family Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]