Without the benefit of a prenuptial agreement clearly delineating a business as separate property, a business will likely be subject to marital property division in a divorce.
If one spouse wishes to keep the business as part of the divorce, it is often necessary to conduct a business valuation so that an equitable division of marital assets can be achieved.
There are various methods to value a business in divorce including:
- The income approach using a formula that looks at historical information to predict future profits
- The market approach which compares the businesses to a similar business that has recently sold to determine market value
- The asset approach which looks at total business assets minus business liabilities
The Work of a Business Appraiser
The most common way to value a business is to hire a forensic accountant specializing in business appraisal to review pertinent business records and use various methods to assess the value. Once the value of the business is determined, a business owner may decide to offer cash or trade other assets to buy out their spouse as part of the division of marital property in a divorce. Alternatively, if a couple has few assets other than the business, couples may decide to continue co-ownership or sell the business and split the proceeds.
Contact an Experienced Marital Property Division Lawyer
Determining the value of a small business in a divorce case is a complex task and the knowledge and experience of your divorce attorney is critically important to achieve an accurate and fair outcome. If you are considering divorce with a business, contact Libertyville divorce attorney Ronald L Bell & Associates P.C. for immediate assistance at 847-495-6000.
