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Can you divide an online business in divorce?

On Behalf of | Nov 15, 2021 | Divorce

Divorcing couples have a great deal to worry about through the process. From negotiating property and debt division to determining an effective parenting plan, both parties will likely work through numerous meetings before reaching an acceptable compromise. When a family business is involved, however, the process gains an additional layer of complexity.

Dividing a business in divorce is generally tied up in an evaluation of physical assets such as real estate, inventory and commercial property. In recent decades, couples have increasingly moved into the online marketplace choosing to either run the entire business digitally or dedicating significant time and resources to operating the organization’s online counterpart. In either case, the digital property can prove a troublesome element of an efficient property division.

An effective financial evaluation

Business valuation is a critical factor in property division. The same holds true for a digital business. Unfortunately, the intangibility of the online marketplace can make this more challenging to accomplish. By using a forensic accountant and other financial experts, it is possible to reach a digital business valuation. They will often examine factors such as annual revenue, revenue trends, industry growth trends, the value of trademarks and the value of copyrights. Additionally, they will factor in any physical property tied to warehousing, shipping, employees and inventory.

The value of effort

Additionally, the behind-the-scenes work is important. Such as who developed the business, who created and maintains the web presence, and who puts in more time running the business. The web presence, unfortunately, can be a complicated factor. Not only is the creation of the website an important factor, but the maintenance of the site, collecting customer reviews and managing the various social media outlets play into the success of the digital business. The court will examine all these factors when determining the business division.

From property division to the division of debt responsibility, divorcing couples have a great deal of compromises to reach. When progressing through the divorce process, it is crucial that you take your time and compile any notes and documentation related to your online business.

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Attorney Harvey S Lutins