The valuation and distribution of marital and nonmarital property can be one of the most challenging parts of a divorce. Things can be made even more complicated if the divorcing couple owns a business. Divorce attorneys and valuation experts are available to determine the value of the business, which will encourage a fair division when it comes time to make the final decision.
When an evaluator determines the value of a business, he or she will consider the various assets that make up the business, from the equipment to the patents and copyrights used by the business to further its goals. Generally, any physical asset that can be measured is referred to as a tangible asset (e.g. equipment, inventory, cash), while any non-physical asset for which future benefits are uncertain (e.g. trademark, brand equity, licensing agreement) is considered an intangible asset.
There are three main methods available to calculate valuation, and each expert will have a different way of handling things.
- The income approach looks at potential cash flow in the future and come up with an amount for the present.
- The market approach considers market transactions involving similar companies to determine the value of the business in question.
- Finally, the asset approach looks at the amount it would take to replace assets in the business.
While all approaches may be considered in the valuation of a business, there can be many variations within each approach, and not all approaches will be applied in every case.
Once the valuation expert has submitted their report with a final business valuation, it is your attorney’s job to convince the court of its reliability. Valuation of a business can be complicated but is an essential part of many Illinois divorces.