Understand the Process of Business Valuation and Its Importance in Divorce

Going through a divorce can be very stressful with many possible points of conflict. While most people would like to keep these conflicts to a minimum, sometimes it’s difficult to do so. Dividing a business during a divorce can be one of these challenges. If you are the owner or part owner of a business that was acquired during your marriage, and you have no prenuptial agreement in place, splitting your business assets can be tricky during divorce. There are a number of ways a business may be divided during divorce:

  • One spouse may buy out the business. In this case, either you or your spouse will pay to the other, half the value of the business in order to become the sole owner.
  • You can opt for co-ownership. You and your spouse may agree to continue to jointly own the business after your divorce.
  • You can sell the company. You may decide to sell the business and divide the proceeds between you and your spouse.

Why a Business Valuation Is Important

A business valuation is a complex process which requires the use of a reliable expert who will be able to determine the value of your business based on:

  • The method of valuation used. Your valuation expert will determine the best formula or method that should be used to assess the value of your business. For example, the business assessor may use the earnings market approach or the book value method.
  • Your business assets. This includes what the business owns and how much it owes. Assets will include inventory, machinery, office equipment, trademarks, patents, as well as customer relations.
  • The business income. The income of your business will be evaluated, including the total amount received from the sale of products or services and taking into account expenses and any losses.

Once your business valuation has been completed, the findings and recommendations can be used in the determinations made by the court in your divorce proceeding or in the negotiation of a business settlement.

Our legal experts at Kirshenbaum & Kirshenbaum understand the individual, personal, and business issues that you and your spouse, as business owners, are facing during your divorce. Let us help you navigate this difficult journey and provide you with practical legal solutions to the complicated issues related to dividing your business assets. Get help by contacting us at 888-591-9976.