If you and your spouse own a business together and you’re getting a divorce, you’ll need to work with the San Bernardino business valuation lawyer who understands how important it is to ensure you have the appropriate figures in place – and who can help you ensure a fair, even settlement between you and your ex.
Unlike many assets in divorce, it can be very difficult to divide a business. In cases such as these, California courts require that a fair market value be assigned to the business.
In order to determine an accurate value for your business, it’s usually best to work with a professional.
A professional – someone who knows how to determine the monetary value of a business – will use a specific process and procedures to determine an owner’s financial interest. The term valuation refers to determining the price someone would be willing to pay or receive upon the sale of the business.
Typically, the valuation involves a wide range of factors, including:
There are two types of property that a business can own: tangible and intangible.
Tangible assets and property are actual possessions that the business has. Tangible property can include:
Intangible property includes things that provide value to the business, such as:
Other than some exceptions, all assets and spouses acquire during a marriage is considered community property. Both tangible and intangible property can be marital assets. That means they must be included in the property distribution settlement.
Liabilities are typically included in property division, as well. That means if the business is in debt, both parties to the divorce may be required to share them.
It’s always best to discuss complex business valuations with your attorney. He’ll be able to give you case-specific legal guidance that’s right for your divorce.
There are several methods to determine the value of a business, but two of the most popular (and accurate) are the book value method and the earnings or market approach.
The book value method takes the business’s books, which usually includes the original value of each asset, and calculates depreciation. It also adjusts for increases in value.
The earnings or market approach to valuing a business is based on the business’s earning capacity or its market value. It typically reflects what an outside buyer would pay for the business while taking its future earning capacity into account.
Getting an accurate business valuation is incredibly important – particularly because the judge will make decisions about who gets what during the divorce.
Remember that business debts can be divided, as well, so it’s best to work with a San Bernardino business valuation attorney who can ensure that everything is completely accurate.
During a divorce, you and your spouse will need to decide how to best divide the family business. Many people turn to mediators who can help them come up with real, working solutions.
Some former spouses choose to co-own the business after the divorce. While this may not be possible for every couple, it can simplify things.
Other couples choose to sell the business, divide the profits and move off in separate directions. However, when one party has built the business from the ground up, this may not be a very likely solution.
In many cases, one spouse keeps the business and buys out the other spouse. As long as the interested party has the assets available to “buy out” the other spouse, this is usually a good solution for professional practices and other businesses.
If you’re going through a divorce that involves complex factors, it’s best to contact a San Bernardino business valuation lawyer who can walk you through the process and bring in the right professionals to help ensure that you make the right decisions for your future.
Call us at 909-466-7661 or contact us online so we can preserve your rights and help you move forward with your divorce.