Business Valuation and Divorce

Divorce is an overwhelming time even when the process is as simple and straightforward as possible. When one of the spouses in question owns a business, divorce can become an incredibly complicated affair. Remember that marital property is split during divorce proceedings, and your business might be considered an asset that belongs to the marriage – and, as a result, divided along with everything else. Business valuation, then, is often an important part of the separation process.

The real question, of course, is how exactly a business’s worth is determined. There a few different things to keep in mind when it comes to this particular process.

Structure Matters
What structure is your business? There are a variety of different options, and each operates in a slightly different way:
• LLC: Also known as a Limited Liability Company, this kind of business is owned by members that can include corporations, individuals, foreign entities, and even other LLCs.
• Sole Proprietorship: This kind of business is owned by a single individual and is not incorporated.
• Partnership: A partnership refers to a business owned by multiple individuals who all dedicate their labor, skill, property, or money to the business and expect a portion of its losses and profits as a result.
• Corporation: This kind of business is owned by shareholders and its profit is distributed to these shareholders.

Determining the type of business you own is the first step in estimating its value. An experienced attorney can be incredibly helpful when it comes to this process, and might be able to help you ensure a fair and painless valuation.

Selling the Business
Once you understand the type of business in question, you can begin to figure out its value. One of the easiest ways to do this is by selling the business and then dividing the profits. This is a good option for individuals who are hoping to completely sever financial ties with their ex. It is most likely not a good option for individuals who want the divorce process to be a quick one, however, as selling a business can take quite a bit of time.

If you are hoping to avoid selling the business, as an aside, you can also opt to dissolve the business or buy out your spouse. The first option is another way to cut financial ties like credit or debt that is attached to the business. The second is, of course, the option to go for if you are hoping to keep the business.

Track Down Assets
Another important step in valuing your business is ensuring that you have located all of the relevant assets. This is a particularly difficult step, especially if you believe that some of those assets might be hidden. It is important that you reach out to an experienced attorney who has the skills necessary to carefully analyze your business holdings and determine likely “hiding” spots.

If you are contemplating a divorce and need help valuing your business, reach out to the professional team at Abear Law Offices! Our passionate team is ready to assess your case and start building a winning legal strategy today.