Divorce requires a complete evaluation of a couple’s assets and finances. When the couple or one spouse owns a business, an assessment is required to value the business and divide assets equitably. If a business is co-owned by both spouses, it is considered community property, and the related assets must be equitably divided. A business that is owned by one spouse remains their property. However, its value will be considered during asset division.
Business valuations following a Frisco divorce can be complex and often require assistance from an experienced property division lawyer. The right legal counsel could streamline the valuation and asset division process to help couples protect their rights and avoid unnecessary disputes.
A business valuation is a financial appraisal that determines the economic value of a business. Business valuations are often legally required following a Frisco divorce when one or both spouses own a business. The process is typically carried out by one or more financial experts, including forensic accountants, certified public accountants, and industry-specific experts. Typically, one of the three following methods will be applied to determine a business’s value.
This approach values a business based on the worth of its assets. It is calculated by assessing the business’s total assets minus liabilities, and is often applied to companies with significant tangible assets.
A business’s current and future income are crucial considerations for its ongoing value. Income-based valuations assess a business’s past and projected future earnings through a process that utilizes financial statements and estimated future cash flows.
A market-based approach is used to assess the current value of a business in today’s market. Financial specialists use industry sales data to compare the business to similar businesses that have recently been sold.
Businesses formed during a marriage are considered community property. A business formed by one spouse before a marriage can also become community property if a spouse acquires an interest in the business during the marriage. Businesses that are not community property may also require valuation to reimburse the non-owning spouse for their efforts to maintain the business in the present or the future. Business valuations are necessary in a Frisco divorce when the following circumstances arise:
A skilled family law attorney could help couples determine when a business valuation is advisable for equitable asset division.
Because a business is often a large part of community assets, business valuations following a Frisco divorce are often necessary to ensure equitable division of assets for both spouses. Whether you are hoping to retain your business after a divorce or you are advocating for your rights to your fair share of assets, the attorneys at Towson Law Firm, PLLC could help you navigate business valuation. If you are going through a divorce as a business owner, we could help. Contact us today to schedule your consultation.
Our Law Firm’s approach to your case is based on individual circumstances. Whether it is a simple negotiated settlement, or it requires an aggressive approach, we will protect and defend your best interests.
