3 Reasons Business Owners Need a Valuation During Divorce

 Posted on August 03,2023 in Divorce

Dividing a family business during divorce can be complicated. There are often many moving parts required to keep a business running smoothly even as its owners divorce. Your business may own a significant amount of capital or real estate. It may hold valuable contracts with employees - or employees may own shares of the company. All this can make equitably dividing a business among other marital assets challenging. As you begin to consider how your marital assets are to be divided, determining who will keep the business or other property in exchange for the business, it is important to know what your business is actually worth. Often, this is not the only consideration. The business may have been one spouse’s primary trade during the marriage, while the other does not have the experience needed to run it alone. However, in Illinois, both spouses are likely to have been deemed to have contributed to the success of the company even if one spouse was more hands-on. It is important to be represented by an experienced lawyer if your divorce will include a family business. 

How a Business Valuation Can Help in Your Divorce 

Dividing a business is not always easy, especially when both spouses have worked directly with the business. Some ways that a business valuation could help you during your divorce include: 

• Dividing other assets - It is important to know what the business is worth in order to know how its disposition should factor into the equitable division of other assets. Is it fair that one spouse keeps the business in exchange for the house, or is the value of the business more in line with that of the car? 

• Removing guesswork - Opening a business can be a gamble, as can making a deal to keep a business during a divorce. Not knowing the present value of your business can make accepting or signing over sole ownership a much bigger risk than it needs to be. 

• Preventing “double dipping” - Many of the other assets you and your spouse own likely stem from profits obtained through the business. You may wish to avoid the problem of one spouse being awarded the business and also being awarded a now-disproportionate share of the existing profits of that business. 

Both spouses can often benefit from knowing the true value of their business. It is important for both parties to agree on the method of valuation so that you are both negotiating based on the same numbers. 

Contact a DuPage County Divorce Lawyer

Goostree Law Group can help business owner spouses establish the value of their company during divorce. Our committed Wheaton divorce attorneys will strive to see that your business is properly considered during the equitable division of assets. To begin with a complimentary consultation, please contact us at 630-364-4046. 

Source: 

https://marinercapitaladvisors.com/resources/business-valuation-issues-in-divorce/