Valuing Your Business When Going Through a Divorce

BusinessWhen you are going through a divorce, there are some main things that you probably think about: custody, house and property division, and more. What happens if there is a business between you and your spouse? Then you probably know that there will come time to divide your business and this is not always as easy as it sounds. Especially in cases where the court determines that the business is marital property, you may have some questions. In California, which is a community property state, the value may be subject to a 50-50 split.

Valuation of the Business 

Valuing the business is the first step in determining how it should be divided. In many cases, your attorney will probably tell you to retain a business valuation expert, and in other cases you and your spouse may decide to split the cost and agree to share an expert. However, if your spouse goes through with a business valuation of their own, you don’t want to entirely trust that on your own because you never know if you are being deceived, which is something you should talk to your attorney about.

There are many aspects that go into business valuation. The expert will look at the financial records of the business, which include profit and loss statements over time, assets, liabilities, cash flow, overhead, and customer good will. Many external factors will be looked at as well, including the type and location of the business, and economic conditions that affect future profitability.

You and your spouse will have to work together to communicate after the business has been evaluated. You must sit down with your spouse to decide on how you want to deal with the business such as selling it for proceeds and dividing them amongst the parties, or continuing to jointly run the business following the divorce. For this part, you may need our help to go over your options. Call us today for more information on how we can help you.