Business Valuations in Divorce

 Posted on December 29, 2016 in Family Law

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.

What Happens to the Business Once it is Valued?

Once the value of the business and marital estate are calculated, and each party’s share is determined, divorcing parties must decide how to proceed. Some may choose to liquidate the business to ensure each party receives their “fair share” in the divorce. Alternatively, one party may “buy out” the other party, if they have the desire and financial ability to do so. Divorcing parties may also attempt to continue working the business together, if they believe they are both capable and willing.

Deciding which option may be most suitable for your situation can be a difficult and emotional process. Each option has its own set of advantages and disadvantages, and parties may have an emotional attachment to a business they have created. This can create a lot of tension during the divorce, which may even cloud your judgement. Thankfully, you do not have to face this process alone. An experienced divorce attorney can help you understand your options, may present you with possible solutions, and they can ensure you have the information you need to make a sound decision.

Contact Our DuPage County Divorce Lawyers

If you need assistance with a business valuation, or suspect that assets are being depreciated, undervalued, or inflated to change the settlement amount in your divorce, contact Mevorah & Giglio Law Offices.. Dedicated and experienced, we can protect your rights and best interests through the entire divorce process. In every situation, we work to get you the most favorable settlement possible. Learn more by scheduling a free initial consultation with our DuPage County divorce attorneys. Call 630-932-9100 and get the quality representation you deserve today.

Sources:

http://www.wsj.com/articles/how-to-keep-a-business-alive-after-a-divorce-1453690994

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

http://www.inc.com/magazine/20101101/the-2010-business-valuation-guide.html