How is Business Valuation Done?
Determining the fair value of a business requires adding business assets (such as inventory, property, and equipment) and subtracting any debts, liabilities, or taxes. During a Florida divorce, business valuation can be determined through the following approaches:
The Income Approach
Determining the real value of a business through the income approach involves using the business's present value and potential earnings to assign a value to the company. The income statement on the business’s tax return can be used for the business valuation.
The Market Approach
Determining the value of a business through the market approach involves using the market or industry standards to assign value to the company. Using the market approach may require comparisons with other businesses within the industry.
The Asset Approach
This requires considering both tangible assets and intangible assets to assign value to the business. Tangible assets of a business include property, inventory, equipment, vehicles, investments, and cash. Intangible assets include intellectual property, trade secrets, patents, and copyrights.
Division of a Business
Florida is an "equitable distribution" state. Under this system, marital property must be divided equitably and fairly between both spouses. In order to ensure equitable distribution of a family business during the divorce proceedings, the following factors may be considered:
- Whether the business was started before the marriage
- The spouses who invested or dedicated the most resources and time into the business
- The tax implications of the sale or transfer of the business
Other Potential Options
Business valuation may present certain challenges and issues, especially when determining the value of intangible assets. In such situations, some possible options to resolve challenges during the business division include:
- Selling the business
- One spouse buying out the other
- Dividing the business (co-ownership)
An experienced attorney can work with a forensic accountant to review business information, including financial statements and tax returns, determine the real value of the company, and guide you through every step of the asset division and divorce proceedings.
Work with a Knowledgeable Attorney
Business valuation and division in a Florida divorce often involve a lot of complexities. Especially when such an establishment is a new business or startup with great potential, valuing and dividing such a business and its assets requires proper guidance from experienced legal counsel. A knowledgeable Florida divorce attorney can explore your available options and help you make key decisions.
With over 60 years of combined experience, our attorneys have devoted their careers to guiding clients in complex divorce matters, including valuation and division of family businesses. As your legal counsel, we will evaluate and determine the real worth of your business and ensure that it is divided equitably and correctly. Using our extensive experience and resources available at our disposal, we will guide you through every phase of the legal process and work to address your needs and concerns.