How Can I Determine the Value of Business Assets During My Divorce?

 Posted on March 13, 2019 in Divorce

If you are a business owner going through a divorce, it is critical that you understand the laws surrounding community property and asset division and how they relate to your company. For many people, a business is considered community property, which means that both spouses own the business under Wisconsin law. This is true even if only one spouse is involved in the business.

If a business will be classified as community property, it must be properly valued so that business assets can be divided during divorce. It is possible that the spouse who is more involved with the business will retain ownership, and the other spouse will receive different marital assets of an equal value.

The Business Valuation Process

The most common way for a business valuation to occur is to hire a forensic accountant to review business records and other material. Information that will be reviewed  includes:

• Assets, both tangible and intangible, such as: inventory, savings accounts, equipment, goodwill with clients, patents and trademarks, or software.
• Liabilities, which may include: loans, payroll, lawsuits, and any other money, goods, or services that the business may owe.
• Net profit.

There are two main methods used in valuing a business. The first is book value, which looks at what assets are claimed in the company’s records and subtracts any liabilities. The second is the market approach, which considers how much the business would sell for on the open marketplace.

In contentious divorces, each party may wish to hire their own forensic accountant. This can be expensive, but it will ensure that spouses have a full understanding of the value of business assets.

Other Options for Asset Division

If business interests make up part of your community property, there are other options besides determining the value of the business so that the assets can be divided fairly. Although rare, some divorcing couples may choose to continue to co-own the business together. Another option is to sell the business and divide the proceeds. This option is often chosen by couples who have few assets aside from the business. In these situations, neither party will need to buy out the other’s share of the business.

Contact a Milwaukee, WI Property Division Attorney

A business can be one of the most valuable assets owned by a married couple. Thus, it is vital to perform a proper business valuation. There are many pieces of information used by forensic accountants, and our attorneys will closely review business valuations to ensure that your rights are protected. To contact the experienced Milwaukee, WI business valuation lawyers at our firm, call 414-271-1440.

Sources:

https://www.forbes.com/sites/lawrencelight/2016/03/07/when-2-business-owners-divorce-what-to-do/#1d896dec343b