When a divorce deals with valuable assets, it can become more complex. Moreover, one of the most testing aspects of a high-asset divorce is the division of a business. If you are thinking of getting a divorce, how can business valuation affect the division of your valuable assets?
What is business valuation?
The process of business valuation deals with determining the economic value of a company or business. It depends on several factors, including the income, market value and asset value of the business.
Why business valuation matters
In California, a business that was acquired or started during a marriage is generally considered community property. This means it is subject to equal division between the spouses. Therefore, business valuation is crucial for these reasons:
- Ensuring a fair property division: An accurate valuation can ensure a fair division of assets, which may protect the interests of both spouses.
- Determining spousal support: The value of a business can also impact the calculations for spousal support.
- Including all assets: Business assets are often complex. They may include tangible assets like property and equipment. Also, they may cover intangible assets like goodwill and intellectual property.
Meanwhile, among those who can conduct valuations are forensic accountants and business appraisers. They must begin the process by determining the standard of value. Then, they should select the valuation method, which could be an income, market or asset-based approach. Finally, they must calculate the value by also considering other factors, such as the financial health of the business as well as industry trends.
Challenges in business valuation
However, the process is not without its challenges. First, identifying and valuing intangible assets might be difficult. Additionally, volatile market conditions can impact the value of a business.
Aiming for your fair share
Business valuation in a high-asset divorce is crucial but complex. With legal support, you may deal with the challenges of your divorce while protecting your rights and interests. Moreover, you may aim for your fair share to enhance your financial security as you prepare for your life after the divorce.
