How Much Is Your Business Worth?

Divorce becomes more complicated when one party owns a business which was acquired or the value increased during the marriage. Whether both spouses worked for the business or only one spouse did, it may be a marital asset that must be divided equitably.

Even if both spouses worked together in the business, it is usually not advisable to continue to do so after divorcing. Usually, once the value of the business has been determined, one spouse will buy out the other's interest in the business. Unfortunately, valuing a business can be difficult.

The most straightforward way to find out what your business is worth is to sell it - by definition, whatever amount you receive for it is the market price. However, many people do not want to sell a business in which they have invested a great deal of time and effort.

While there are a number of methods for valuing businesses, it's widely known that different accepted methods of valuation can result in very different values, which is why it's important to hire an attorney who can call upon experts to advise on valuing a business.

Valuing a business

To accurately assess a business's value, all of the following must be considered:

  • The business's property, including inventory, manufacturing machinery and any other equipment
  • The building and/or the land in which the business operates, if it is owned by the business
  • The value of any patents, licenses or other intangible assets
  • The value of the business's reputation and goodwill, and client relationships
  • Any debt owed by the business that reduces its value
  • The business's profitability: income minus operating expenses

Even if the spouses trust each other, trying to value a business without hiring experts is a mistake. People err in trying to save money by not hiring an accountant: It is money well spent because it ensures that your business is valued fairly and accurately. And if there is a possibility that one spouse is hiding assets, it is imperative that you get an experienced forensic accountant.

If you or your spouse has a business, it is crucial that you get the very best legal advice when you're considering divorce. The Law Offices of Michael A. Robbins has relationships with the experts you need in the Detroit metropolitan area and the knowledge to use their appraisals to ensure your business distribution is fair and equitable.