Whether your company is a family business, a sole proprietorship or a partnership, you must have a clear understanding of its value if you and your spouse have decided to divorce.
Your legal team should include a professional appraiser who can perform the necessary valuation.
A major asset
Your business may be the most valuable asset you own. As such, it will take the spotlight during the property division phase of your divorce, and you must find out how much the company is worth. To do so, you will likely work with a business appraiser or perhaps a forensic accountant. Such professionals examine company financial records to put a value on the building (if you own it), the equipment, machinery and computers, and additional real estate holdings that exist. The appraiser will also review how much income the company generates annually and estimate income growth for the next few years. In addition, there are intangibles to consider, such as how recognizable the business is and how that visibility adds to its worth.
Next steps
You can decide to keep your business, put it on the market, buy out your spouse’s interest in it or sell yours to your spouse. You and your soon-to-be-ex may be partners in the business, but if you have no involvement in the financial side of the operations, the discovery phase and the appraiser’s work are essential to ensure that you receive your fair share if you sell the business outright or participate in a buy-out agreement.
Other considerations
After filing for divorce, there will be a period in which to determine business value and file a statement of worth. If you decide to sell to your spouse but he or she does not have the resources for an immediate buyout, you can take a promissory note as long as there is something of value backing it up. You must also think about tax implications, which is a good reason to add an accountant to your legal team. Your attorney will provide the help you need to keep from making any legal missteps when the worth of your business and its eventual disposition become the focal point of the divorce proceedings.
