Have you received a divorce claim and have questions and concerns about valuing reputation prior to divorce?
Business people and the self-employed often find themselves anxious about the collapse of the business they have opened and invested in, while their spouse believes they have a stake in the business, as they have enabled its business development. The spouse may claim his share of the money, shares, ownership and other means, so that it is not the initial amount that will determine the future of the business, but through quite a few other control options.
Whether it is a business that is a family printing house, a bakery or an accounting firm or start-up that may be up for sale in the future, it is necessary to assess the value of the business and even deduce the value of the person standing before the court and earning potential in present and future.
Valuation of reputation prior to divorce
Whether we’re dealing with spouses who are one or both self-employed, or whether they are employees, the Financial Relations between Spouses Law, 1973, stipulates that the assets accumulated in the joint life are divisible. Included in the assets to divide as well are the business reputation and personal reputation. Businessmen and self-employed often find themselves anxious about the collapse of the business they have opened and invested in, while their spouse believes they have a stake in the business as they have enabled its business development. The spouse may demand his/her share in money. Stocks, ownership and more. Hence, it is not the initial amount that will determine the future of the business, but through quite a few other control options.
Whether it is a business that is a family printing house, a bakery or an accounting firm or start-up that may be up for sale in the future, it is necessary to assess the value of the business and even deduce the value of the person standing before the court and earning potential in present and future.
In the State of Israel, there are no fixed formulas, and the valuation of the company or business can range on a fairly wide scale. In assessing the value of the company's reputation, also not for the sake of divorce, the following will take part in its preparation: members of the company's management, its legal advisers, an accountant and an actuary, who take into account past performance and future possibilities. The judge in the case will also be able to determine the value of the business with the help of an expert opinion with experience in the field.
Along with accounting parameters such as profits in recent years or sales transactions of similar assets, one has to take into account the durability of the business without the person in charge – will it collapse? Is it possible to replace him or acquire the knowledge he has gained from another manager? This is in order to examine whether there also exist a personal reputation.
The court may award an amount to be paid as a monthly annuity for a limited period of time or as a lump sum. In the ruling, additional considerations arise when ruling on personal or business reputation, such as the couple's ages and their future earning capacity; The common property they have accumulated; Private property of each of the parties, if any; Their investment in establishing a career – and what the other spouse did in those years. Either way, what guides the judge in the hearing is the creation of equality between the spouses, and not God forbid causing economic harm to either of them. The goal is not to make just an equal distribution but such that will be fair to both parties, and sustain both without harming one of them. If the decision to give a high lump sum might destroy the paying spouse he will be able to seek the help of the court to change the decision while examining all the parameters. It should be noted that the valuation is valid to its issuing date, and neither party will be able to know the degree of accuracy, for better or worse.
