Business Valuation in an Ontario Divorce

When couples in Ontario divorce, they must divide their assets equally. This can include businesses that were owned by one or both spouses at the time of marriage or during the marriage. The value of a business must be determined through a valuation process, which can be a complex and contentious issue.

Understanding Business Valuation in Ontario Divorce

There is no set method to determine the value of a business in a divorce case in Ontario. However, valuators typically use one of two approaches: current value or future earning potential. The "liquidation value" method focuses on the amount of money a business would receive if its assets were sold today, while the "going concern value" method considers the business's future earning potential and intangible assets such as brand name. The court may choose the method that provides the highest value and best reflects the reality of what will happen to the business.

Hiring Your Own Valuator

If you own a business, it's important to hire a valuator who will act as a witness and explain the valuation method used and why it was chosen. This is especially important if you and your spouse cannot agree on a value for the business and the issue goes to court.

Assigning a Fair & Equitable Value to Your Business

The court will aim to choose a value that is fair and equitable, taking into account evidence from both sides. To support your chosen method of valuation, it's important to provide extensive evidence, including a valuator's report if one was engaged. With the right information and preparation, you can ensure that your business is valued accurately and equitably in your Ontario divorce case.