How do you determine the value of your business in divorce?

| Nov 16, 2017 | Property Division

When you’re getting a divorce as a business owner, you need to determine the value of your business for the purpose of asset division. Knowing what your business interests are going into your divorce negotiations will help you determine a fair and equitable buyout under the law.

A “buyout” for business owners in the throes of a divorce refers to how much money the business owner will pay to his or her spouse for the spouse’s legal share of the business. Alternatively, it refers to how much money you will receive for backing out of the business.

As you can imagine, determining an accurate value of your business is essential. Generally, the spouse who is being bought out will want the value of the business to be higher, so this spouse’s appraiser and attorney may be inclined to “round up” when valuing the business. Conversely, the person who is buying the other spouse out will want the business value to be as low as possible.

It’s vital to higher an independent and unbiased appraiser to estimate the value of your business. A forensic accountant or professional business appraiser can assist with these appraisals to make sure that every record and data point has been accounted for.

During all of this, it’s important for business owners to be careful that the divorce process and dividing the family business does not interfere with the business’ ability to continue operating, servicing clients and paying employees. As such, you may want to leave the process of dividing your business as much as you can to the divorce lawyer and accountants you have hired to assist you with the process.

Source: Forbes, “How Divorcing Women Entrepreneurs Can Get What They Deserve,” Kerry Hannon, Nov. 02, 2017

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