Business Valuation related to Divorce
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Whether part of a divorce settlement, for sale or for estate planning, the proper valuation of a family or closely-held business is essential. Page Law will work with you in retaining well-qualified and well-respected business valuation experts. All of the business valuation experts will have been qualified in court previously as experts. Page Law will present and defend those experts in court. The experts retained will apply recognized valuation techniques and professional standards to assure that the value of the family business is fairly and properly stated and defensible under scrutiny, for both current assets and future income streams. We will get input when needed from professionals in real estate appraisal, accounting, business valuation, and other fields to be sure that the business, medical practice, rental properties or other income-generating assets are correctly valued. Our investigations will make every effort to assure that no part of the business or potential business income source is overlooked in order to secure a fair division of property in the divorce settlement.
Business valuation in divorce proceedings may involve each party engaging his or her own experts to value the assets, debts, and income generated by the business and present the results to the court. It is important that your legal counsel use qualified and well-regarded business valuation professionals so that your valuation will be upheld and accepted by the court. The value of the business may be impacted by whether the business was started before or after the marriage. The value of the business, if started before the marriage, may be impacted if it was actively managed or operated during the course of the marriage, or if little or no community effort was put forth to increase the value of the business during the marriage. Since business valuation is complex and may be subject to interpretation, it is vital to have your attorney involved in overseeing the business valuation as it will be presented in court.
A business valuation will have a variety of assets whose value must be determined by different means, depending on the nature of the asset. Business assets may be of two main kinds, tangible and intangible. Tangible assets include items such as cash, accounts receivable, inventory, equipment, and real property which usually can be valued under fairly straightforward methods, although there is still variation in methodologies that may result in different conclusions by different consultants (for example inventory of obsolete product). Intangible assets, which include things like patents, copyrights, contracts, and goodwill may be more subject to different professional opinions and must be rigorously investigated to provide the most solid valuation case. For both tangible and intangible asset valuation, sometimes more than one method may be applied.
Another element of business valuation vital to an equitable divorce settlement is determining the value of future income from the business. There are various methods for estimating future income, each subject to varying assumptions, opinions and valuation methods. In most cases, past and future compensation will be taken into account, along with historical revenue streams and future projections. Whatever the methods used, your business valuation should be carefully constructed, strongly presented and rigorously supported. The business may also be valued according to the goodwill of the business.
Page Law provides professional and rigorous business valuation services for dissolution of marriage proceedings. Please contact our office if you need assistance with valuing your business.