In brief
In a divorce involving a BV, it must be assessed whether the shares fall within the community of property and which valuation method applies.
- Under a prenuptial agreement, the BV may have been kept outside the community of property, but a non-compliant periodic settlement clause can still lead to a settlement.
- In the case of community of property or limited community of property, the shares generally fall within the community and must be divided or settled.
- Several methods are available for the valuation of the BV; an independent accountant or certified business valuator is often engaged in many cases.
- The DGA’s salary and dividend distributions play a role in calculating alimony.
- A buyout arrangement must be feasible without jeopardizing the liquidity and continuity of the business.
Does your BV fall within the community of property?
Nuptial agreements
If you are married under a prenuptial agreement, it may stipulate that the BV falls outside the community. In that case, the value of the shares does not need to be divided. Please note: if a periodic settlement clause was included but not executed annually, a settlement obligation may still arise.
Community of property
In a full or limited community of property, the shares generally fall within the community. In practice, shares are rarely literally divided. In many cases, a buyout is chosen: one partner compensates the other for half of the share value.
How is the BV valued?
There are several methods, each yielding a different result. The most commonly used methods are:
Intrinsic value method
Debts are deducted from the BV’s assets. This provides a snapshot of the book value but does not take future profits into account.
Profitability method
A capitalized value is determined based on the projected future net profit. This method does not take the intrinsic value into account.
Discounted Cash Flow method
The value is determined based on expected future cash flows, discounted to the present. This is considered the most reliable method, but it is also the most complex.
In many cases, the interests of partners conflict when choosing a valuation method. An independent expert provides clarity.
What does this mean for alimony?
The amount of alimony for a DGA depends on the total income: both the DGA salary and any dividend distributions are considered. In a buyout arrangement requiring external capital, the interest and repayment burden can reduce net income and thus affect financial capacity. Depending on the circumstances, a customized calculation is required.
Based on Real Cases
In one case, Simmelink Lawyers assisted a DGA in a divorce where the valuation of the BV led to discussion. One partner proposed a high DCF value; the other partner contested the growth expectations. By engaging an independent certified business valuator and linking the buyout arrangement to a realistic payment schedule, the parties were able to reach an agreement without jeopardizing the continuity of the business. Every situation requires its own assessment.
Our Attorneys at Law
The Simmelink Lawyers team specializes in family law, International family law, and inheritance law.
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Our goal: legally correct, enforceable agreements that bring peace and clarity.
Carla Simmelink – Family Law Attorney, International Family Law and Inheritance Law
Family Law Attorney, International Family Law and Inheritance Law
Valerie Lingg – Family Law Attorney, International Family Law
Family Law Attorney, International Family Law
Eva Zaunbrecher-Boschloo – Family Law Attorney, International Family Law
Lawyer at Law (International) Family Law
Clients are guided by a dedicated lawyer who oversees the entire file and communicates discreetly.
Frequently Asked Questions
Not necessarily. Whether the BV is included in the division depends on the matrimonial property regime and any prenuptial agreement. In a buyout, the shares are usually not literally split, but one partner compensates the other for half of the share value. Depending on the circumstances, other structures are possible.
The valuation determines the amount of any buyout but has no direct influence on alimony. The DGA’s income, including salary and dividends, determines financial capacity. If the buyout leads to higher interest charges, this can reduce net income and thus affect alimony.
This is possible if the prenuptial agreement stipulates that the BV falls outside the community. If there is no exclusion clause, or if a periodic settlement clause has not been complied with, the BV may still be involved in the division. Depending on the circumstances, a lawyer will assess your position.
The turnaround time depends on the complexity of the business and the availability of annual accounts. In many cases, a business valuation takes several weeks to months. Starting preparations in time prevents delays in the divorce procedure. This is general information, not individual legal advice.
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Do you have questions about your BV and the divorce?
Contact us to discuss your situation. Is a procedure already underway? Request a second opinion.
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