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Valuing a Business in a Divorce Case

Posted by Chris Peterson | Oct 18, 2013 | 0 Comments

Valuing a Business in a Divorce Case

Conroe divorce lawyer When a party to a divorce owns, or partly owns, a business, this generally is included in the marital estate as a community property asset. As a Conroe divorce lawyer will tell you, valuing the business is not as simple as one may imagine, and often involves both research and the hiring of an expert.

Why the Business Value Must Be Determined

It is not likely that a business will be sold or liquidated in order to split its assets. Indeed, a spouse may not even be sole owner, but a partner. It is necessary, therefore, to determine the value of the business for purposes of dividing the marital estate. A attorney will have a fair amount of insight into how this can be accomplished.

The Basics of Valuing the Business

Coming up with a value for a business can be fairly straightforward. Generally, as with other marital assets, the optimal situation is for both parties to agree on a determined amount based upon reference to trade publications, the Internet, and the business' balance sheet. However, as is also true with other marital assets, an agreement does not always readily occur. This is when having a lawyer in your corner can be invaluable.

Complicating Factors

The valuation can become complicated because of a number of factors. For one, most individuals do not have a clear understanding of just what constitutes a business' worth. Your attorney may hire an expert to help make this determination. However, there are differing views even among experts. Some believe that a business' value should be measured objectively, that is, in terms of what it is worth on paper; others feel the value should be measured subjectively—how much, in essence, it is worth to the spousal owner. This latter approach can be understood if you consider that generally the business comprises the individual's work: Were he to seek employment elsewhere, then, what would he need to earn as an equivalent?

At its most fundamental, the value of a business is the fair market value of its assets minus all liabilities, including outstanding business loans. However, this simple approach does not take into account the fact that determining fair market value can also be a somewhat complicated matter. Ultimately, then, you will use number of means in arriving at a value that is acceptable to both parties.

If You Need Legal Assistance with a Divorce

If you need assistance with valuing a business in a divorce, a Conroe divorce lawyer at Peterson Law Group will be happy to work with you. We will provide you with quality legal assistance and help you through this difficult matter. Call to arrange a consultation today at 936-337-4681.

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About the Author

Chris Peterson

Chris Peterson is the owner of Peterson Law Group. He practices primarily in the areas of wills, trusts and estate planning; probate and trust administration; elder law; and business law. Chris is also the owner of Brazos 1031 Exchange Company.


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