Our Divorce Attorneys Can Help
If you and your spouse are divorcing but share ownership of a business, its value must be accurately determined to ensure an equitable division of assets. This can be a long and complicated process, one that requires the use of experts to make sure no detail is overlooked.
How Is a Business Divided During Divorce?
Since California is a community property state, that means that each spouse is entitled to one-half of the marital assets when they  divorce. When a couple that owns a business gets divorced, it is important to determine if the business is community or separate property. If the business started before the marriage, there may be an argument that it is separate property. If that’s the case, the business assets might not be subject to equal division. However, if the business started during the marriage, it is likely community property and its assets will likely be subject to equal division.
Once the businesses value has been determined, one spouse can either buyout the other one through a cash payment, a payment plan, or a cost offset against other community property.
How Is a Business Valued During Divorce?
Generally, business valuators take one of the following approaches when they determine the value of a business: income-based approach, asset-based approach, or a market-based approach. Each approach generally takes into account the following factors:
- The profitability of the business
- The goodwill of the business
- The tangible and intangible assets of the business
Avoid Common Business Valuation Mistakes
Business valuation can be one of the more difficult issues to resolve in a divorce With our extensive experience with this specific area, our attorneys can pursue a resolution that checks all the boxes, protecting your financial security and your company, no matter your specific needs and objectives.
With the right attorney in your corner, you can avoid costly business valuation mistakes:
- Using a valuation method not accepted by the courts
- Using a valuation method that does not accurately include all of the assets of the business
- Failure to use or improper use of income multiples to determine goodwill
- Improper valuation of or failure to use minority shareholder discounts
- Failure to consider a company’s atypical income and expenses
- Omitting assets or liabilities
- Failure to consider or improperly considering a buy-sell agreement
Ready to Guide You Through the Business Valuation Process
At Moshtael Family Law, we have well over a century of collective family law experience and can provide the legal representation you need. We also have access to the right type of professionals to determine your company’s worth and then protect your interests during litigation, mediation, or settlement proceedings. Our divorce lawyers can help you identify your goals and then work to reach these.
