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Using a mediator to put a value on a family business

Many Pasadena couples who are in the midst of getting a divorce may own or be involved in a family business. Sometimes, they even both own stock in the business or each have some sort of managerial role in the business's affairs.

Like every other piece of property, a business has to be divided during the course of a divorce so that each couple gets that to which he or she is entitled under California's community property laws.

However, family businesses present a special challenge to property division since, unlike cash or even shares in the stock of a large corporation, shares in a small business do no have a readily identifiable book value. In other words, it's hard to know what a family business is worth without selling it.

If they wish to fight about the value of the business, each spouse could hire his or her own business evaluator and have each one of them testify in court. The judge would then have to decide which one of the two experts is more believable. Alternatively, the judge may just pick a number in the middle of the two experts' estimates.

However, divorce mediation is another means by which a couple can come to an agreed value for their family business. While the most important thing is that the two spouses can agree on a value, lest one believe that the exercise would involve simply making up numbers, there are actually several ways spouses, and their mediator, can get a good idea of how much the family business is worth, so long as they have accurate and complete business records.

One who wants to argue about the exact value of a business will likely need to hire an expert who will testify in court. However, Californians who are interested in agreeing to a reasonable value in an effort to move on with their lives should consider coming to a ballpark figure and then having a mediator help reconcile any differences with the other spouse.

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