Evaluating my shop due to a Divorce

Portable Welder · Oct 24, 2016

I have had my business since 1988, my wife and I met in 1993, we got married in 2000 we had our first son in 1997 prior to marriage and a daughter in 1999 and our 3rd and last child in 2000.

So what is she entitled to: I'm pretty that things I had prior to our marriage should be mine.

I have a 5,000 square foot shop with 6 overhead cranes, 18' ceilings at my house on 8 acres.

So we have to figure what the house, property and buildings are worth as one unit.

I then need to find someone to evaluate what my tools are worth, 3/16" x 10' apron brake, 1/4" x 10' shear, several welders, pipe benders, Iron worker, 3 big welding tables, Rollers,Lathe, Grinders, pressure washer, saws, mag drills and 28 years of other tools.

So who is the best person to evaluate this, my first thought was a auctioneer because he actually knows the real time value of what its worth in its current condition.

I want to be fair, id rather work things out with my wife and her get the money verses fighting and the lawyers getting a big pay day.

Any advice from other shop owners who have been through a divorce would be greatly appreciated.

There is also business asset evaluation that they might look at, my attorney told me I will have about 6 years of alimony and of course child support.

We each have an attorney, but you guys our way cheaper to get advise from to take back to the attorneys and get the legal opinion.

JNieman · Oct 24, 2016

Just go talk to a lawyer. It'll be the best money you ever spend.

Don't ask a bunch of armchair internet fools about financial planning your divorce. That's fucking stupid.

I don't regret a single goddamned penny I paid a lawyer.

Divorce lawyers are not scum, scavengers, or slime unless you hire them TO BE THAT WAY, and even then, some may reject you. You need someone to tell you the law and how things go in your area, because that does matter.

LAW

YER

LAWYER.

Mechanola · Oct 24, 2016

Try to figure the practical or “time” value of each item. The insurer would want to know figures in case you have to replace something due to water damage or fire or the like. That is in most cases list price of dealer.

To sell a used item is what you want to know, how much is something worth at this point of time. A list price of something new is generally cut in half when going second-hand. From there you start when finding a deal with a buyer.

6061Mike · Oct 24, 2016

Sorry to hear about divorce, that is usually bad news no matter what...

Agree with the others, just talk to a lawyer. Only you and the (ex)wife know the details...

surplusjohn · Oct 24, 2016

Consider a divorce mediation. It sounds like you want a equitable settlement and mediation avoids a lot of the bs.

paul39 · Oct 24, 2016

Sorry to hear about the divorce.

An independent real estate appraiser can give you an official on paper estimated worth of land and buildings.

Your tax department will also have a valuation for the land and buildings and for the business equipment if you are required to pay tax on that. I think the auctioneer valuation is a good idea.

Your local laws will have some bearing on who gets what.

I hope things can be worked out fairly.

My sister had an acrimonious divorce. They had a recently built nice house. Her husband got a very low valuation intending to give her half of the value. She countered that she would buy his share and had money to do so. There was a sudden reappraisal.

The above is a defense against a very high or very low appraisal.

As to business asset evaluation, if that is value of a working business, and you are the operator of the business, what is the value without you?

Paul

awander · Oct 24, 2016

My wife and I worked out our own divorce.

When we first decided to get divorced, we each went to an attorney for a consult, told the attorneys we wanted to work things out on our own, but we wanted to know what the law was, and what would usually happen if we asked a court to make the decisions.

We took that info and ran with it, and we were lucky enough that neither of us decided to be an asshole. Once we had our divorce agreement and parenting plan worked out, we ran them by another lawyer, just to make sure the language was "legal" and proper. This lawyer filed for us, and we were done!

The whole process took a few years, though it could have been shorter. We took our time because because my ex had already moved to her own place, and we had worked out schedule for the kids, etc.

A few years after that my brother decided he wanted out of his marriage, and he asked me if I would help him work things out with his wife, like my ex and I had. Unfortunately, he hooked up with a lawyer who convinced him that the only thing to do was file for divorce, and ask for full custody of his kids, with no alimony or child support payments. Naturally, his wife fought that, and they ended up spending tons of money on lawyers, and eventually settled on just what the law provides for.

My sister and I told him he was being a jerk, and he hasn't spoken to any of us for the last 5 years.

stephen thomas · Oct 24, 2016

Consider a divorce mediation. It sounds like you want a equitable settlement and mediation avoids a lot of the bs.

Caveat being probably best if the mediator is also a lawyer. I know a couple practices built around that model. "Nobody has to be a jerk or villain". Though sometimes there's no controlling one or both (former) partners.

As with sourcing any professional service, politely pay the consultation fee & leave if their "agenda" does not match yours.

Thankfully have never personally needed such service, knock on wood.

smt

Portable Welder · Oct 24, 2016

Jneiman, we do have attorneys, we are hiring a real estate appraiser, that's the easy stuff, We have no intentions on trying to do this without attorneys, I am trying to find out who can do a shop appraisal for my tools ( This is something we can do without an attorney ), my first thought was a auctioneer.

My second question is aimed at business owners who have gotten divorces, did your wives just want to split what the tools were worth or did they say, no there's also value in your name and reputation, this is when you bring in an accountant that understands ( Business asset evaluation )where they look at your books, potential future earnings, the tools and what the name is worth.

Splitting the equipment is one thing but going after future earnings could be a lot more.

toolsteel · Oct 24, 2016

The term "jerk" has been thrown around quite a bit in this thread.....and I have no reason to think it doesnt apply in the above mentioned cases. I just want to point out that in some cases (mine being one of them) people are divorcing because they disagree on important issues. Disagreeing does not always = jerk. Mrs. Toolsteel V1.0 felt it was perfectly acceptable for me to pay 60% of daycare expenses based on what we were paying at the time of our divorce. 6 months later when she was having her boyfriends 13 year old son watching our 2 kids after school instead of enrolling them in the after school program, she felt it was also acceptable for me to continue paying. I disagreed and the mediator thought i was being a jerk when i asked for a reciept for daycare expenses. Hopefully you can work it out amiably......just bear in mind, no one is as concerned about your interest as you are....the next best thing would be the person you are paying to protect your interest.

Bobw · Oct 24, 2016

Portable Welder said:
I am trying to find out who can do a shop appraisal for my tools

Call your local machine tool dealer... Mazak, Haas, whatever you have up there in the great white north...

Many moons ago I worked in a shop and some stuff was going down and our local Mazak dealer did an appraisal of
a big pile of equipment... I believe he charged $600, and he had to drive from ABQ to get here.

He walked through, and we (and some others talked), he explained what and why ABC was worth $XXX.. A lot of stuff he had to
go back and do some research on to nail down a #, but he was pretty much in the ball park off the top of his head..
I'm pointing this out because if you find a guy like that, it may be
best to have your (ex)wife there so he can explain things, and she doesn't think you're just pulling low
ball numbers out of your ass.. Might not even be a bad idea to let her set it up and pay him... Even if you
give her the money.

Evaluating your shop as a running a business as opposed to a pile of iron... I got nothing there.

Mud · Oct 24, 2016

Evaluating your shop as a running a business as opposed to a pile of iron...

Business brokers usually throw out that a going business sells for 4X 1 years net profit, if it clears 100K, then it should sell for $400K. There are always lots of "buts" added in for wiggle room, like how much debt is involved, how much inventory, IP like patents and trademarks, large sums of proprietary equipment, etc, but they always seem to start at 4X income when approaching an owner desiring to sell (or even not desiring, when trying to find a client to make money from).

I also thought of auctioneers, there are industrial auctioneers who buy a shop for a flat price, then auction it off at their own risk, so they must have a good way to value such a shop.

Gordon B. Clarke · Oct 24, 2016

Do lawyers always have to be used in a divorce?

I was married first time for just over 10 years. We have a daughter but just grew apart. Separated amicably and agreed on all that needed to be agreed on.

Married again and have now been married over 35 years. Now also have a son and both daughter and son have always gotten along great together. My wife and ex wife also get along when together. No, never be "best friends" but never any angry words.

My point with all this is wondering if it is possible for you and your wife to reach an amicable agreement that keeps you both happy and then do what it takes to make it into a binding agreement. Do lawyers always have to be mixed into divorces in the USA?

It's always the kids that suffer most when a divorce isn't friendly.

doug925 · Oct 24, 2016

Gordon B. Clarke said:
Do lawyers always have to be used in a divorce?

They don't have to be.
I had a friend draw up the documents, and after a few revisions, my Ex and I filed for divorce.
Fortunately, there were no kids to consider. Our biggest issues were: 1) My company 2) her medical license [and stratospheric income that comes with it] and 3) the house.

I kept the house & my company, and she kept all that she will earn from her practice.

Doug.

Mike1974 · Oct 25, 2016

Gordon B. Clarke said:
Do lawyers always have to be used in a divorce?

I was married first time for just over 10 years. We have a daughter but just grew apart. Separated amicably and agreed on all that needed to be agreed on.

Married again and have now been married over 35 years. Now also have a son and both daughter and son have always gotten along great together. My wife and ex wife also get along when together. No, never be "best friends" but never any angry words.

My point with all this is wondering if it is possible for you and your wife to reach an amicable agreement that keeps you both happy and then do what it takes to make it into a binding agreement. Do lawyers always have to be mixed into divorces in the USA?

It's always the kids that suffer most when a divorce isn't friendly.

No, but it sounds like the OP needs one with the business and all. I was married to first wife about 4 years, highschool sweethearts blah blah. We did not have children or property so I got the papers from the local library (yes, it was that long ago

) and filed them at the courthouse for something like $20.

Someone else mentioned this, and I am curious as well. How is it possible for the wife to get something against potential earnings if you are the owner/operator of said business?? I don't think it has been mentioned, but I would *think* it would be entirely different if you owned a 20 man shop that could continue to do business, vs you working alone in the garage/shed/polebarn...

Mechanola · Oct 25, 2016

All the inventory of my former shop was financed by an ex of mine. We’re still good friends. I owe her a lot of money. After I had sold the lathe and immediately paid her back what I could make from the machine, I still have the miller and its accessories. Drill press, bench grinder, motor saw, hand punch press, sheet cutter, all sold.

Of course, the real only asset is the human. We are the ones who produce something, machines don’t do anything. Assets can be valued very differently by different people. Pen pushers rate much lower than machinists do. Naturally. But you can tell about what you have, also installations, and I’m sure good answers will come up here.

Guest · Oct 25, 2016

Problem is every state is different, so only a fellow divorced person from Michigan would be able to give you trusted advice. If you were divorced in California where I moved from 10 or more years of marriage buys a wife lifetime alimony if she earned less money than the husband. Married less than 10 usually gets the wife alimony for the same length she was married. As far as possessions everything acquired after marriage was divided as was any appreciation in previously acquired items. So if your business was worth $100k when you were married and $500k now, she would be owed $200k in California. That is going to be the scary part, the business evaluation, a machine shop unless you have your own product or long term contracts isn't worth much more than the equipment and real estate.

cnctoolcat · Oct 25, 2016

The real estate is easy to evaluate, as that's done all the time.

As far as your shop goes, a simple way to look at it is what happens in the typical partner buyout. One partner offers to pay the other a given price for their part of the business. The other partner either has to accept that price and take the money, or be willing to give the offering partner that much money for their half.

There can be no stalemate. One has to buy the other out. So when you come up with a dollar figure of what you think your shop is worth, you have to be willing to sell it all for that price if she isn't willing to take that much money for her part.

And that's how you settle it. The dollar figure basically doesn't change. One buys the other out for that amount. Chances are her and her attorney will ask for more money, but don't offer any more. Just say that's the dollar amount, and if she doesn't want to accept that much, then she buys you out of the shop.

ToolCat

Portable Welder · Oct 25, 2016

Thanks for every ones advice, Mike 1974, I do have employees, I have companies such as U?S that I have a contract with to maintain approx. 22 facilities in my region, we work at several concrete and asphalt plants in our area, we have 2 welding rigs that go out on jobs daily and a full blown welding shop.
So yes, we are a small 3-4 man welding shop but we take on projects so we do general contracting where we do Footings, concrete, design and build, electrical and finish painting.
So we do a little more than weld on lawn mowers.
Trust me, I'm not taking all of this advice to the bank to get it certified, just curious how things have gone for other business owners in my shoes.

Once again, thanks for everyones input. Regards.

Mud · Oct 25, 2016

FWIW, it sounds like you are a major income producer in the business, probably doing the design and planning and selling and promotion. In that case, the business is worth a lot less to someone else without you in it, it becomes more the value of the equipment and fixtures than as a going concern.

Evaluating my shop due to a Divorce

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