212. Dividing a Business in Divorce: What the Valuation Doesn’t Tell You

So that's why what it's worth is an important question for sure.

If you go to an attorney or even in mediation, that's when the business is involved, that's front and center.

What's it worth? But that can't be the only question.

So let's start with what's actually there.

And one matter recently that we had, the client's forensic accountant described to us that, hey guys, the marital business is essentially goodwill in a truck.

But then we asked about, hey, how about the 20 online courses, the intellectual property, the book, and the proprietary methodology that's used very specific to this business that makes it so unique.

That description did not end the conversation.

It opened a series of questions.

Who owned the materials, especially when wife was a contributor to some of the methodology in the book? Were these other assets generating revenue? Could someone else sell or license them? And how had they been considered in the valuation?

You know, it's also a very protective conversation for whoever established the company or who has IP, like you mentioning, they become very protective of that, especially with the goodwill conversation that you mentioned.

You know, without me, this business won't be here without me, we wouldn't have any of this.

There is no IP without me.

And that's not necessarily true.

But there is really some truth to that as well, you know.

So you really have to decide what rabbit hole you're going down.

But even with people who have IP, there might not be a value to it today, but there could be a value to it five, 10 years from now.

So are we even considering that when you negotiate? So there's a lot of good questions that you need to ask and not necessarily discount goodwill.

You do have to consider it, but to what degree on both sides.

Exactly.

And, you know, some businesses are created to scale and, where the IP becomes much more valuable than when a business is created to just run day to day.

And that can change and it can alter, but it's something that should be discussed.

And so this is where the client's knowledge matters.

You may not know how to value intellectual property, but you certainly would know or may have some information about, you know, if your spouse spent years creating a course library or that your spouse wrote a book or that you wrote a book with your spouse.

That's information worth bringing into the financial discussion.

You know, our MTS portrait, that's where we connect what the client knows to the available records and identify what needs clarification.