Complex and emotionally triggering in almost every way possible, divorce can ultimately result in the dissolution of a business. As such, owners are often wary of the process, and may even resort to criminal activity to protect their investment. Others may attempt to use the company as leverage or a way to seek revenge. Whatever your situation - no matter how contentious it may be - the following information can help. It explains the business valuation process and lets you know what you can expect. You will also learn how to ensure that you and/or your spouse’s business is accurately valued so that you can maximize your chances of getting the divorce settlement you deserve.
How the Value of a Business is Determined
Business valuation is a complex process with numerous factors to consider. Debts, assets, liabilities, and previous earnings history are analyzed. Future earnings and potential tax obligations are estimated as well. A business analysis expert then uses this information to calculate the overall value of the business, which is then added to the total value of the marital estate. This does not mean the business will be split equally, however. Instead, each party’s financial needs, future earning potential, potential tax obligations, contributions to the business, and other financial factors are examined. This is then used to determine what their equitable (“fair”) share of the business and marital estate should be.