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Business Valuation in Divorce

Does a business formed before marriage get divided?

Generally, no. However, if the business grew significantly in value during the marriage due to marital funds or effort, the *increase* in value may be subject to division.

How much does a business valuation cost?

It varies greatly depending on the size of the business. A simple valuation might cost a few thousand Lari, while a forensic audit of a large company will cost significantly more.

Can the court force the sale of the business?

Courts prefer not to destroy a functioning business. Typically, they order one spouse to buy out the other's share. If a buyout isn't possible, a sale might be the last resort.

What is "double dipping"?

It's when a spouse receives a share of the business value (asset division) and also claims alimony based on the income from that same business. Lawyers work to ensure fair calculations.

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Business Valuation in Divorce: The Key to Fair Division

In divorce proceedings, property division often becomes complicated when it involves a business or company shares. Unlike an apartment or a car, whose value is relatively easy to determine, a business is a living organism whose value depends on many factors: revenue, assets, brand reputation, and market potential. Business Valuation in Divorce is a critical procedure that determines how much money is owed to the other spouse as compensation.

Under Georgian law, a business created or developed (its value increased) during the marriage constitutes community property, regardless of whose name it is registered under. Incorrect valuation can lead to the unjust enrichment of one party or the financial ruin of the other. Legal.ge offers a service where lawyers and financial experts work together to determine the true market value of the business and ensure a fair distribution of assets.

What Does Business Valuation Service Cover?

Experts on our platform offer a comprehensive approach:

  • Financial Audit and Analysis: Detailed study of the company's financial statements, bank records, and tax returns to see the real picture.
  • Selection of Valuation Methods: Applying the appropriate methodology (Income Approach, Market Approach, or Asset-Based Approach) depending on the business type.
  • Separating Personal and Enterprise Goodwill: Distinguishing between the value of the company brand and the specific spouse's personal reputation (which is often not divisible).
  • Asset Tracing: Uncovering hidden assets or income that the spouse managing the business might be concealing.
  • Expert Report Preparation: Creating a document valid for court that substantiates the business value.

Common Scenarios and Real-World Examples

Business valuation is necessary in the following cases:

  • Family Business: Spouses built a company together. Upon divorce, one must buy out the other's share. An accurate price is needed for the buyout to be fair.
  • One Spouse as Passive Owner: The business is registered to the husband, and the wife was not involved in management. Upon divorce, the wife is entitled to 50% of the shares if the business was created during the marriage.
  • Appreciation in Value: The business belonged to one spouse before marriage, but during the marriage, its value increased tenfold due to the support of the other spouse or family funds. Only the increase in value is subject to division.

Georgian Legal Framework

Business valuation and division are regulated by:

The Civil Code of Georgia: Which establishes the principle of community property. Article 1163 clarifies that a spouse's personal property (e.g., a business existing before marriage) can become community property if it is established that its value significantly increased due to expenses incurred during the marriage.

The Civil Procedure Code: Which defines the rules for appointing expertise. In court disputes, the Levan Samkharauli National Forensics Bureau or a private auditor is often appointed, whose conclusion is decisive.

Law on Entrepreneurs: Regulates the rules for alienation of shares, which must be considered when paying compensation (e.g., partners' pre-emptive rights).

Step-by-Step Service Process

Working with specialists on Legal.ge involves:

  1. Requesting Documentation: The lawyer requests all necessary financial documents from the other party.
  2. Engaging an Expert: Selecting an independent appraiser or auditor.
  3. Valuation Process: Calculating the business value using the chosen method.
  4. Negotiation/Court: Using the derived figure at the negotiation table or in court to demand compensation.
  5. Enforcing the Decision: Transferring shares or setting a payment schedule.

Why Choose Legal.ge?

Business valuation is not just math; it is legal argumentation. If the valuation is wrong, you could lose the result of years of work or receive less than you deserve. Legal.ge combines knowledge of family and corporate law to protect your commercial interests during the divorce process. Trust the numbers and professionals — find an expert on Legal.ge.

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