Divorce can be an overwhelming experience for anyone, but it can be even more complicated for business owners. A family business may have taken years to build and develop, and a person who has put so much time and energy into their business efforts will most likely want to avoid any issues that could affect their ownership of the company. At the same time, a business is likely to be a valuable asset, and both spouses will want to make sure it is considered properly during the property division process.
To ensure that all marital assets can be divided correctly, it will usually be necessary to perform a business valuation. By taking steps to determine the market value of the business, spouses can place a monetary figure on business assets, giving them a better understanding of the total value of their marital estate. They can also determine whether there are any liabilities that will affect either party and whether a probable increase in value of the business in the future will benefit the person who will own the business. Ultimately, the information gained in a business valuation will inform the final decisions made about the division of all marital property.
Ensuring That a Business Valuation Is Accurate
A business valuation may involve one or more different approaches that take different types of information into account. In many cases, the simplest approach is to add up the value of all business assets and subtract any liabilities, which will give an estimate of the business's worth. However, this may not provide a complete picture of the value of the business. To gain a better understanding of the current and future value of the business, factors such as earnings, profits and losses, and projected growth may also be considered. In cases where couples expect to sell a business during the divorce process, they may gain an estimate of the potential sale price by reviewing recent purchases and sales of similar businesses.
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