Valuating A Business For Divorce

A married couple that owns or runs a family business together will encounter the unique challenge of “dividing” that asset should they go through a divorce. Most cases of property division involve savings accounts, actual cash, or tangible items like a home or an automobile. It can be a complex affair to try to divide something that is more abstract and ever-changing like a business.

Legacy Counsel can provide the legal assistance and dedicated counsel you need to fairly valuate your business during your divorce. Our network of professionals provide you with the skills and knowledge of more than the “regular” uncontested divorce lawyer.

How a Business Can Be Valuated

Valuating a business is the process of examining it thoroughly to determine its value if it was sold, or how much income someone would stand to make from running it for a given fiscal year. You can think of a business valuation as an appraisal for your business, rather than your home. With the help of a professional with a comprehension of intricate legalities and business sense, you can accurately valuate your business so it can be added to your marital property during divorce.

Five things to consider when valuating your business are:

  • Tangible Property: What your business owns that can be physically catalogued, such as office equipment, real property locations, product inventory, etc.
  • Intangible Property: What your business owns that is not physically catalogued but still has objective value, such as patents, trademarks, and your company’s good reputation.
  • Profit: Subtracting the total expenses of your business from your total income will get a base idea of your total profit; you may need to examine years of financial records to create an average profit-per-year amount that is usable in your case.
  • Depreciation or Growth: Normal wear-and-tear to your business’s physical property will cause depreciation that must be subtracted from your business’s value; oppositely, a healthy catalogue of loyal consumers, clients, or customers can reverse depreciation and add significant unstated value to your business.
  • Calendar Date: The fair market value of your business can only stay static for a short period of time; a business valuation must be conducted shortly before the divorce is finalized to ensure it remains accurate.

Work with Our Attorneys to Find the Answers

Determining the value of your shared business must be an exact science that uses clear mathematical procedures and a careful eye for detail. If it is not, the court may reject your property division plan or you could stand to lose out on thousands if your estimation was too low. Rather than guessing to get to the answers you need, retain the services of our Orange County divorce lawyers to have confidence that everything is being handled appropriately. We can discuss buying your ex-spouse’s share of your business, where to collect the financial information you will need, and more.

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