Only Pending Sales of Family Businesses Should Incude a Non-Compete Clause

Family Businesses

Only Pending Sales of Family Businesses Should Incude a Non-Compete Clause

In re Marriage of Czapar involved a family business where the family trial court reduced the value of the business by deducting the value of a non-competition clause even though the family business was not for sale.

The parties were married for 22 years and had several businesses together. For one of the businesses, the parties were contesting the value of the business.

The court appointed an expert to value the business. At trial, the family court awarded the business to the husband. The wife received almost half the value of the business in cash. However, the court deducted from the value of the business, the amount the husband would incur if he sold the business and was required to sign a non-competition clause. The wife appealed the order.

The Fourth Appellate court agreed with the wife. It held that if there is no pending sale the value of a non-competition clause should not be taken into consideration of the value of the business, because it is too speculative in nature. The only time a non-compete clause should be taken into consideration is when the sale of the business is actually pending.

If you need legal advice and are looking for a family law lawyer in Orange County to address a dissolution issue such as the value of a business or any other divorce matter such as legal separation, annulment, custody, child support, spousal support and/or property division, please consider Treviño Law in your divorce attorney search. We are located in Laguna Hills right off Lake Forest exit to both the 405 and 5 freeway.

Although the posting of this information can be considered free legal advice for a divorce in Orange County, it does not address other factors which may play a significant role in a particular dissolution. Circumstances in your divorce may alter the results in your dissolution.

Please note that this legal advice does not establish a family law attorney-client relationship. This is a legal advertisement for Treviño Law, Inc.

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