Business Valuations and Divorce

When one or both individuals within a marriage own a business and those spouses choose to divorce, specific steps will need to be taken to be sure asset distribution is equitable and fair.

Business valuations are a key aspect of asset division. If you have questions about how businesses are reviewed during a divorce, bring them to the attention of a West Palm Beach family attorney.

How Is a Business Valued?

Valuing a business is not always straightforward, and in many cases businesses are large marital assets. If a business was established during the course of a marriage or if both of the spouses actively contributed to business growth during the union, the business, or at least a portion of it, will be subject to equitable distribution rules.

Valuing a business is a meticulous process, and often professional expertise is required. For instance, appraisers and financial experts know how to determine the fair market value of the business by taking various factors into account, including financial statements, assets, liabilities, revenue, profitability, market conditions, and industry trends.

Common steps typically taken in order for a valuation to be complete:

• Gathering financial information. Both of the spouses exiting a marriage need to provide comprehensive financial documentation, including all financial numbers related to businesses. This includes tax returns, financial statements, balance sheets, profit and loss statements, and other relevant financial records.
• Expert appraisals. There are appraisers and financial experts who are professionals in assessing organizational value through multiple valuation methods, such as the market approach, income approach, and asset-based approach.
• Identifying non-marital and marital portions. If you are in a situation where a portion of a business’s value is non-marital, meaning it was acquired before the marriage or through an inheritance, the valuation process could carry nuances as the non-marital and marital portions of the asset will need to be distinguished.

Once the value is established, decisions regarding equitable distribution of marital assets will need to be made.

What Can I Do to Protect My Business?

If you are the spouse who owns the business and you are worried about how to protect your business interests during divorce, know there are experts who can guide you through the process. You want to seek legal counsel that is experienced in handling business valuations in divorce cases, because a skilled attorney will work to ensure a fair assessment of your business’s value takes place.

A West Palm Beach family attorney can also advise you on whether an alternative dispute resolution method, such as mediation, could be a desirable route to reaching an amicable settlement. Negotiating a fair distribution of assets can save you time, money, and emotional stress.

Is a business owned by you, your spouse, or the two of you? If so, accurate business valuations and transparency will be part of accessing an equitable divorce agreement. Talk to the legal team at Bruce S. Rosenwater & Associates about your expectations for the future and how to secure the post-divorce life you want. Schedule your free initial consultation today.