You are a business owner, captain of your own ship, master of your own enterprise. Then your spouse files for divorce and demands an interest in your business. When your entrepreneurial spirit kicks in it is going to shout out reasons why that can and will not happen. That spirit will shout ideas such as “my spouse’s name is not on the business, “I am my business and my spouse has nothing to do with it” and “my accountant can show that my business is losing money”. While those facts are certainly important, do not allow your entrepreneurial spirit to reason you into a false sense of security regarding what the Superior Court has the authority to decide in the context of your divorce case.
The Superior Court has the authority to order you to sell your business, give a percentage of the proceeds to your spouse or even award your spouse a portion of the business itself. If you are contemplating divorce or an action for divorce has already been filed you need to begin thinking about the quantifiable value of your business. To determine the quantifiable value of your business you will likely need to hire a business valuator. A savvy attorney will hire a business evaluator on your behalf and will explain the benefits of doing so. The business valuator will determine a valuation date as well as the standard of value. The benefit of hiring a business valuator is that a skilled business valuator will adjust the overall value of your business to account for actual adjustments including lawsuits, insurance proceeds, capital gains and losses in addition to certain discretionary expenditures. As a business owner you understand that these actual adjustments are not only significant and impact the true profitability of your business but are also the unavoidable costs of engaging in business. It is imperative that the judge or jury presiding over your case understands these details of your business operations. Otherwise, the Court will be forced to make a decision with limited information and that decision will almost always have a detrimental effect on you and your business in the future.
If your spouse files for divorce you should also begin thinking about the unquantifiable value your business holds. To highlight what I mean by “unquantifiable value” of your business I use the example of renowned entrepreneur and co-founder of Apple Inc., Steve Jobs. His story is infamous, after beginning Apple in his parent’s garage with Steve Wozniak the pair turned Apple into a billion dollar empire. Several years later, the board of directors at Apple fired Jobs from his own company. After which Jobs entered into what he described as “one the most creative periods of his life” and went on to found NeXT, Inc. and revolutionize the world of animation with Pixar. Jobs returned as CEO of Apple over a decade after he was fired. In the meantime, Jobs found it difficult to even talk about having been fired from Apple without becoming emotional. Apple was more than a technology company worth hundreds of millions of dollars to Jobs. Apple had an unquantifiable value that Jobs lost the moment he was fired from Apple and the thought of losing Apple was enough to bring Jobs to tears. It may be the case that your business is to you what Apple was to Steve Jobs. Even if you do not value your business the way Job’s did it is important to recognize the difference at the outset of your case.
Undoubtedly, Steve Jobs believed that no one could take his own business from him. Do not allow yourself to believe that the Superior Court cannot effectively take your own business from you. If you or your spouse has filed or is considering filing for divorce contact an attorney to discuss your options with you and explain how protect your business. Otherwise, take a note from Steve Jobs and have your next billion dollar idea ready for development once your Final Judgment and Decree of Divorce is signed.
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