Assessing options to perform business valuations in divorce

On Behalf of | Nov 18, 2019 | Business Valuation |

You’re looking at one of the most complex parts of the divorce process, where the courts divide your property. But your assets aren’t a simple matter, especially when you’re addressing the division of your business.

Married couples co-own 3.7 million small businesses in America, and any divorce in that group usually means a business valuation must take place. There are typically three ways to find the value of your business, which include analyzing several factors to make a successful appraisal.

Finding worth

There isn’t a one-size-fits-all approach, and one method of valuation make work better for your business than others:

  • Market: A company with comparable characteristics can reveal how much your business is worth. Finding another entity with similar size, sales and profits in your area can be difficult. But the closer the characteristics, the better idea you can get of what you’ve got in terms of value.
  • Income: Your business’s balance sheets can also show how much it’s worth. Determining the value in this way requires a lot of variables, including variables that aren’t yet in place. Pending investments, additional revenue sources and projected risks can all impact the stream of profits in the future and can alter the valuation of your business.
  • Asset: A look at what your company is holding and managing can give you an idea of its value. It may appear as a simple equation of assets minus liabilities equals value, but determining assets can be an encompassing task. Tangible assets are derived from their estimated costs, but intangible assets like trademarks, patents and debts will also need to be figured.

Finding what your business is worth can be difficult, but understanding the different systems can be the doorway to a successful valuation. Make sure you’re getting the right numbers, and you could be in line for your fair share once the courts look at your records.