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After a short discussion with Vanilla, we have decided to start this thread do discuss business topics. Many people either share ownership of a business with their spouse or have a business of their own. It is my hope that in this thread we can discuss the different aspects of handling business issues during this difficult time in our lives.

Please feel free to ask questions related to business and provide suggestions to those who are in need.

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This sounds like a great idea for a thread.

I own my own business and running it, moderating, and being on forums can sometimes be a challenge.

Certainly getting bomb dropped and my father dying was the most challenging time of my life.

My business has survived and is trying to stay profitable even in this tough economic climate.

Splitting a business in a divorce can surely help to kill it off.

What other topics would people like to discuss?


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My WW and I own a business and we are 50/50 in it. It seems that the approach her L is taking is that the business can run without me but not without WW. I agree. However, her reason for going this route is to stop me from getting distributions. Last year they averaged $2,800 a month. Also, it would be very expensive to hire someone to replace me. They could not afford it right now.

WW and I started the business 8 yrs ago. Up until the last 4 months I was in charge of anything having to do with money. Invoice, bookkeeping, taxes, projections for hiring, travel, office space, insurance coordination. I worked without receiving a pay check for 7yrs.

My position is that I not only am a 50% owner. I have put up capital, and I have contributed 100's of hours of work. Essentially, the business would not be where it is today without me. Just because I am not working in the business anymore does not mean my investment goes away. I expect to still receive distributions. This is a real heartache for WW. She can not understand the investor relationship I have with the business. She feels that if I am not contributing anymore that I should not receive distributions.

I am a CPA, so I am very knowledgeable in business practices and business administration and business laws. I feel that I have a strong position. However, educating a divorce judge may prove to be difficult.

Last edited by WhyUs; 08/14/15 12:58 PM.

Me: 30's W: 30's M: 12yrs
EA: Started 3/2015
MC Started: 4/2015
She moved out and served 6/2015
PA: Confirmed 10/5/2015
2 young kids

"If you do not stand for something you will fall for anything."
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Bump for V


Me: 30's W: 30's M: 12yrs
EA: Started 3/2015
MC Started: 4/2015
She moved out and served 6/2015
PA: Confirmed 10/5/2015
2 young kids

"If you do not stand for something you will fall for anything."
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I owned a business for 35 years, WH was made redundant came into the business. played at it, expected the lions share and I had to buy him out. He got 50% merely because he had capital.

I paid out his investment as in reality he could no longer contribute nor had he.

I am a qualified international financial and tax consultant dealing in complex matters. I am also a pert q accountant, and provide advice on complex transactions including derivatives and tax efficient structures. WH was qualified by experience.

WhyUs, when we first discussed this I was concerned that you undervalued your contribution to your business with WW. The Managing Partner is the glue for any business, no matter what it is.

In several circumstances I have worked with clients to provide buyout structures, often it's best for the retiring partner to get an early valuation of a business, especially where that's the managing partner as the business often disintegrates. This is also between partners of the same sex.

I will look to providing a post on business valuation which I would appreciate comments.

What do you see as the practicalities of splitting a business? Is it the client base?

Could you find a technical partner to take up the slack? Are there clients who rely on you?

WH was going to be the managing partner but he didn't do very well so at the moment I am doing both roles, it's too much for one person and invariably I do the client work first. It's more interesting and urgent.

V

Last edited by Vanilla; 09/08/15 01:22 AM.

Freedom is just another word for nothing left to loose.
V 64, WAW


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I am also sure there are issues of behaviour in the workplace.

V


Freedom is just another word for nothing left to loose.
V 64, WAW


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Cadet

How long did it take you to turn your business around?

Was your Mrs Cadet involved in it and did you buy her out?

V


Freedom is just another word for nothing left to loose.
V 64, WAW


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Valuation is the big question right now. The business is projected to grow considerably over the next 5 years. -- over 1 million in revenue. Profits will be 250k. Right now revenue is 300k profit 70k. We purchased a building that will allow this growth. This is great because it is a fixed cost.

In the USA acceptable valuation methods vary by state. I have looked for the exact laws in my state but am finding it difficult to find anything solid. I will eventually have to hire someone to do the valuation if we can not come to terms that I find acceptae.

Honestly, I think I would have more leverage if I already knew the value of the business prior to trying to negotiate. Howeve, in order to save time and money upfront I am willing to take my chances. Of cours my L may think otherwise and I will consider his opinion on the matter.


Me: 30's W: 30's M: 12yrs
EA: Started 3/2015
MC Started: 4/2015
She moved out and served 6/2015
PA: Confirmed 10/5/2015
2 young kids

"If you do not stand for something you will fall for anything."
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The business can not be split. WW is uniquely qualified in her field. No clients rely on me. Without her the business will fail. She is not a doctor but she is in the medical field. We have also expanded the business to include other medical specialists.

In want to say exactly what it is we do but I am afraid WW will find this board.


Me: 30's W: 30's M: 12yrs
EA: Started 3/2015
MC Started: 4/2015
She moved out and served 6/2015
PA: Confirmed 10/5/2015
2 young kids

"If you do not stand for something you will fall for anything."
Joined: Oct 2014
Posts: 8,855
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It's not necessary to say what you do.

I believe the key here is to identify 2 things

The first is: is the business likely to succeed? If so there is growth coming so the methods used may need to be NPV, projected growth methods. The net discount value of future enhanced growth.

So at 800,000 with escalation at say 20% pa for 20 years with a discount factor of 5%. Rough and ready would give your 50% a business value of 4,000,000. (that includes replacement costs of the managing partner, if you took that as a dividend for life I think you would be looking at your 50% about £30,000 per year (unleveraged). You could seek to let the business have deductions for part by taking some redundancy and/or pension contributions for you. In return you could offer a call option on the shares. If WW decide to sell the whole sum becomes payable from proceeds. And/or If WW does a 'spoiler' starts a new company say, you would need joint and several.

Of course with this solution you would be asked to sign a non compete agreement.

Those are my thoughts as usual comes with a caveat this is rough and ready, I would need more time to crunch. If it were me I would go for a flat fixed deal if I could.

Another way of valuing is Income Multiple but strangely the goodwill is rather similar. Unique business prop will need professional valuation. But I would say 10 to 15 times income.

You could try NAV but that doesn't look appreciate neither does open market sale.

Just my thoughts, spreadsheet models can confirm it. I just crunched your details through a business model for another client.

Don't forget you created a unique business model.

V

Last edited by Vanilla; 09/09/15 07:57 AM.

Freedom is just another word for nothing left to loose.
V 64, WAW


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