Performing a business valuation occurs frequently in the context of family law litigation. Equitable distribution is a process the Court undertakes to divide marital assets between parties when they divorce. As part of the equitable distribution process, the Court first identifies which assets are marital. Then they determine value of the assets and assign them to the parties based on a variety of factors.
Assigning Asset Values
Assigning values to assets during the equitable distribution process can be tedious. The spouses may disagree about the value the other spouse assigns to a marital business. Or one party may not value the business by including all the property owned by the business. Some business owners themselves cannot conduct a business valuation of their own business. Whatever the reason, there may be a dispute about the value of a business in the case. Business valuation in the context of a family law case is the process of ascertaining the dollar value assigned to a business to be used in the financial aspects of the case.
Engaging an Expert
Engaging a financial professional or expert witness experienced in valuing businesses may be a wise decision. Through the divorce process, the attorney assists the professional conducting the business valuation. The attorney can conduct discovery in the family law case to obtain the business’s financial documents. Other discovery methods can be utilized to learn about a business’s intricacies that lend to its value.
An expert in business valuation can then utilize the information obtained in discovery to opine on the business’s value. The professional can also be utilized to present testimony to the court. It is prudent to make sure an expert is appropriately credentialled to conduct the business valuation
There are several methodologies utilized to value a business during the divorce process. The method to be used is best determined by a qualified business valuator or accountant with experience in valuing businesses. Martin Family Law has experience engaging expert witnesses and accountants qualified in determining the value of a business. The attorney consults with the business valuation expert to determine the correct methodology.
Business valuation experts consider valuation methods such as fair market value, net value, investment value, intrinsic value, or others. Determining the correct standard of value is important, which may even be a hybrid of certain valuation methods or what is otherwise known sometimes informally as the “divorce value”.
Goodwill is often considered during the business valuation process. Goodwill is sometimes defined as the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor. The amount of value that goodwill contributes to the value of a business will vary from business to business and is oftentimes considered when a business is valued in a dissolution of marriage case.
Engage the Right Professionals
Even the most business savvy individuals need guidance. If you find yourself in a situation where business valuation is an issue in your dissolution of marriage, contact Martin Family Law for a free consultation about your case. All consultations are strictly confidential.
Martin Family Law handles dissolution of marriage cases involving the valuation of businesses primarily in Palm Beach County, Florida.