Valuation of Shares at the time of separation.

[LdiJ]

Let me walk that back - I don't know if that's false....but it is highly unlikely to me that a court would say "sorry lady, you're shit out of luck and our hands are tied because it's a privately held company".

No, a court might very well say however, "sorry dude, you are shit out of luck and our hands are tied because it's a privately held company and you have to live with the original valuation". The burden of proof here is on you, not on her. You are viewing things backwards.

 

[spidrr019]

I am not wrong. Where the heck did you get the crazy idea that she could only get a payment if the company's books were reinvestigated? A valuation already exists that was made at the time that you separated. If your wife gets payment for the shares it will be based on that valuation. You are not entitled to a "do over" as far as that is concerned. What you do potentially have the right to argue is that the shares were not actually worth that much based on what ended up happening with your employment and the shares. The burden of proof will be 100% on you to prove that the value of the shares tanked not just because of your behavior, but in general. However a judge wouldn't even have the authority to demand that your former company open their books to facilitate that. The company and it's shareholders are not parties to your divorce.

Consult an attorney. Seriously, just do it before you cause yourself more trouble.

How could I possibly get in any trouble? I'm of course going to consult an attorney. Nothing has happened.

This is good information though. I did not know of this. I thought because the initial valuation was not done by a credible source - nor was it done by a 3rd party that she agreed to - perhaps she would have an argument to re-evaluate.

That's like saying any random person could've fumbled and bumbled around to get a $ amount of the valuation in 2018 and yet now that's somehow the only valuation she must accept.

 

[spidrr019]

No, a court might very well say however, "sorry dude, you are shit out of luck and our hands are tied because it's a privately held company and you have to live with the original valuation". The burden of proof here is on you, not on her. You are viewing things backwards.

But I am perfectly comfortable with the $40,000 valuation at the time of separation. She is the one that is arguing the validity on that valuation.

 

[LdiJ]

How could I possibly get in any trouble? I'm of course going to consult an attorney. Nothing has happened.

This is good information though. I did not know of this. I thought because the initial valuation was not done by a credible source - nor was it done by a 3rd party that she agreed to - perhaps she would have an argument to re-evaluate.

That's like saying my any random person could've fumbled and bumbled around to get a $ amount of the valuation in 2018 and yet now that's somehow the only valuation she must accept.

Yes, because she didn't challenge it at the time. BTW, a CPA is a credible source for a valuation. While there is a slight chance she could challenge it now, forcing the company's books open as a way to make a new valuation is not an option.

 

[spidrr019]

Yes, because she didn't challenge it at the time. BTW, a CPA is a credible source for a valuation. While there is a slight chance she could challenge it now, forcing the company's books open as a way to make a new valuation is not an option.

Got it.

Excellent insight.

Thank you.

 

[LdiJ]

But I am perfectly comfortable with the $40,000 valuation at the time of separation. She is the one that is arguing the validity on that valuation.

That is not what you said earlier in the thread. Earlier in the thread you said that you wanted to argue that the shares were only worth the token .50 you got paid for them. If you are perfectly comfortable with the $40,000 what was the purpose of this thread?

 

[spidrr019]

That is not what you said earlier in the thread. Earlier in the thread you said that you wanted to argue that the shares were only worth the token .50 you got paid for them. If you are perfectly comfortable with the $40,000 what was the purpose of this thread?

Good question.

While I am comfortable with the $40,000 valuation - of course I would want to explore avenues that could potentially be argued to lessen the value.

When you go to purchase a car with a budget you're comfortable with - would you not want to figure out if you can get a better deal?

The point of this thread was originally to determine if there was merit in arguing whether or not the shares held any real value at all above the worst case scenario.

 

[spidrr019]

Good question.

While I am comfortable with the $40,000 valuation - of course I would want to explore avenues that could potentially be argued to lessen the value.

When you go to purchase a car with a budget you're comfortable with - would you not want to figure out if you can get a better deal?

The point of this thread was originally to determine if there was merit in arguing whether or not the shares held any real value at all above the worst case scenario.

We've now come full circle, thanks to your insight - that:

A. The valuation must be accepted and that potentially a CPA is a credible source valuator.

B. If she was unhappy with the valuation, she should have acted on that in 2018 when the valuation was done.

C. A court cannot order a privately held company to open their books for a divorce case involving an ex-employee that previously held shares of the company.

 

[LdiJ]

Good question.

While I am comfortable with the $40,000 valuation - of course I would want to explore avenues that could potentially be argued to lessen the value.

When you go to purchase a car with a budget you're comfortable with - would you not want to figure out if you can get a better deal?

The point of this thread was originally to determine if there was merit in arguing whether or not the shares held any real value at all above the worst case scenario.

Ok, then we are back to the original discussion. The burden of proof would be on you (without any help from the company's books) to demonstrate that the shares were worth less than 40k. You would use what actually happened with you leaving the company and what you got for the shares as your evidence of that. Her attorney would then argue that it was your bad behavior that caused the shares to lose their value, and that your wife should get other assets to compensate for that. Then, the judge will decide based on the information and evidence put before him/her.

That of course is assuming that the two of you don't come to an agreement.

 

[spidrr019]

We've now come full circle, thanks to his insight - that:

A. The valuation must be accepted and that potentially a CPA is a credible source valuator.

B. If she was unhappy with the valuation, she should have acted on that in 2018 when the valuation was done.

C. A court cannot order a privately held company to open their books for a divorce case involving an ex-employee that previously held shares of the company.

D. She will likely have to accept the original valuation and while I will instruct my attorney to nevertheless argue that the shares didn't hold any value above the worst case scenario - I am comfortable with the original $40,000 valuation.

 

[spidrr019]

Ok, then we are back to the original discussion. The burden of proof would be on you (without any help from the company's books) to demonstrate that the shares were worth less than 40k. You would use what actually happened with you leaving the company and what you got for the shares as your evidence of that. Her attorney would then argue that it was your bad behavior that caused the shares to lose their value, and that your wife should get other assets to compensate for that. Then, the judge will decide based on the information and evidence put before him/her.

That of course is assuming that the two of you don't come to an agreement.

Excellent. This is what I was looking for.

You nailed it.

Thank you.

 

[LdiJ]

We've now come full circle, thanks to his insight - that:

A. The valuation must be accepted and that potentially a CPA is a credible source valuator.

B. If she was unhappy with the valuation, she should have acted on that in 2018 when the valuation was done.

C. A court cannot order a privately held company to open their books for a divorce case involving an ex-employee that previously held shares of the company.

I would change A to: A CPA can be a credible source valuator and unless I convince a judge to lower the valuation based on what happened, it's going to stand.

Otherwise, I agree.

 

[spidrr019]

I would change A to: A CPA can be a credible source valuator and unless I convince a judge to lower the valuation based on what happened, it's going to stand.

Otherwise, I agree.

Understood.

Let me ask you this. If you were in this situation and you were comfortable with the original $40,000 valuation - would you even try to argue to lessen that valuation?

I ask because you mentioned "Her attorney would then argue that it was your bad behavior that caused the shares to lose their value, and that your wife should get other assets to compensate for that."

Would you want to open yourself up to that or simply argue that the initial valuation should be honored, pay the $20k and wipe yourself clean of this sticky situation.

 

[LdiJ]

Understood.

Let me ask you this. If you were in this situation and you were comfortable with the original $40,000 valuation - would you even try to argue to lessen that valuation?

I ask because you mentioned "Her attorney would then argue that it was your bad behavior that caused the shares to lose their value, and that your wife should get other assets to compensate for that."

Would you want to open yourself up to that or simply argue that the initial value should be honored, pay the $20k and wipe yourself clean of this sticky situation.

It would depend on what my "bad behavior" was and whether or not I was willing for it to be discussed in court. If I was embarrassed about the situation and the 20k wasn't going to cause me serious hardship then I might push to settle the matter and pay the 20k. If I wasn't all that embarrassed or the 20k was going to cause me serious hardship then I might push the matter. I would also want my attorney to give me an idea on my odds of prevailing as well and what he would charge me to fight the matter as well. I am pragmatic. If it's going to cost me 10k to fight the matter in court plus be really embarrassing with low odds of winning I am probably going to go ahead and pay the 20k.