When ownership of a business or professional practice is involved in your divorce, the stage is set for an often-complicated variation on common divorce themes: Business ownership. As in complex property division cases of any type, the need for skilled legal counsel is clear, but the emotional impact can be particularly acute when ownership of a small business, partnership, or professional practice is involved.
Knowing how to obtain a proper valuation of your business, including both personal goodwill and commercial goodwill, is critical to a favorable outcome.
At Hendershot, Cannon, Martin & Hisey, P.C. , we understand how emotionally difficult it can be to divide property when the property at stake is the cornerstone of your finances and possibly your work life. Our firm has more than 25 years of experience resolving sensitive divorce cases for business owners and their spouses, as well as a fully-dedicated business law section to reinforce our service to our clients. Speak with a seasoned Houston divorce attorney in a consultation-call (713) 909-7323 or request one with our short online form.
Our knowledge of business transactions and litigation lets us identify the true scope of property division issues you face as a business owner or the spouse of one. This includes a broad range of potential issues, such as realigning business responsibilities in small, family-operated businesses and the valuation of professional practices. What is often needed in these cases is to recast the relationships to reflect new roles. This must occur not only within the marriage, but within the ownership or operational structure of the business itself.
For example: As a doctor, lawyer, or other professional with an ownership share in a professional practice, you may need to buy out your spouse's community property interest. By the same token, as a spouse, you may need to negotiate to have your ex pay you a fair price to buy you out. This type of arrangement is also often necessary in small businesses in which both spouses have an ownership interest.
If you and your spouse each have ownership interests in a small business, the next steps depend a lot on the business' size and structure. This is because "small business" is a broad term that means different things.
Here's what that means for our approach: We begin our work by clarifying the interests at stake. Our attorneys have extensive experience handling divorce issues involving a full array of small business types and structures. These structures run the gamut from simple mom-and pop stores organized as sole proprietorships, to elaborately arranged limited partnerships and limited liability companies (LLCs).
Each type of business structure offers its own particular challenges and opportunities in divorce:
Professional practices-such as law and medical practices-can be particularly challenging to handle in a divorce. Although their value is often considered community property subject to division, as a practical matter, a professional practice usually cannot be divided. Part ownership cannot given to a spouse who is not licensed to practice in that area. What then? Much depends on how your practice (or your spouse's practice) is organized and your specific situation. As with other businesses, there are basic structural differences between traditional partnerships and entities such as PLLCs, which are now widely used among professionals.
Often, the result is a buy-out of the interest that the non-practicing spouse would have. However, the value of a practice can be steep-especially when elements such as goodwill are considered. We have found creative solutions for many practices worth millions of dollars to ensure equitable division of property-without harming the practice. The unique details of your case could include a preference by one or both spouses to use a substantial amount of contractual alimony to address the issue of spousal support or buy out an interest in a business or professional practice. That type of preference could affect how such a buyout is structured.
Every case is different. We will tailor a solution that protects what matters most to you.
Dividing an interest in a small business or professional practice in a divorce proceeding is not simply a matter of a court automatically cutting the interests in half. It is a complicated and often cumbersome process. To protect your interests, you need a skilled law firm at your side to sort out the valuation issues and keep your objectives at the forefront. We know the minute details of issues, like what financial statements actually say and the calculation of goodwill in a business or professional practice. Our insight requires the ability to distinguish among intangible assets, commercial goodwill and personal goodwill-an art form by itself.
Here is an example: Practices are largely valued based on the doctor's or lawyer's own knowledge, skill, and reputation. We are familiar with the factors to consider in determining fair-market value. Above all, we know how these issues play out in litigation and how to cross-examine the opposing party's valuation expert.
Because we have such comprehensive business knowledge, we can take on any challenge you face. Equally important, we are committed to cultivating a personal connection. With that connection, we will always have clarity on what it is you want us to accomplish. That's the definition of a fruitful attorney-client relationship.
In many cases, to end the emotional strain, you may be inclined to settle the case without much litigation. We will certainly respect that desire. However, we've learned one thing in our decades of practice: The best way to achieve a good outcome, no matter the case, is to thoroughly prepare for trial.
To learn more about how our law firm can help resolve your property division issue, contact us online or call (713) 909-7323