Why you need to conduct a business valuation during your divorce

On Behalf of | Aug 5, 2022 | Dividing Assets |

If your divorce is occurring on bad terms, and even if the circumstances are amicable, you likely have marital assets that you want to protect. A business is one such thing that can be a point of contention even in a mutually agreed-upon divorce.

Many complications arise in high-asset divorce cases, especially if one spouse is a business owner. Conducting a thorough business valuation is a necessary part of handling the division of a company as a marital asset.

What is the purpose of a business valuation?

During a business valuation, an impartial appraiser will take stock of your company’s finances, property, and other assets to determine the true value of the business. Because businesses are often marital property, an accurate valuation is necessary for the court to determine how to equitably divide the business as an asset between spouses. Should you decide to handle the division of assets outside of court through a mediation process, your valuation can still be an essential tool when negotiating terms with your spouse.

Will a business valuation help you protect assets in a divorce?

Unless your business is under the protection of a prenuptial or postnuptial agreement, there is little you can do to prevent the splitting of your company. However, you can use your valuation to negotiate the division of assets with your spouse. By offering an equitable share of other assets, such as the family home or other valuable property, your spouse may agree to let you keep the entirety of your business.

It is important for a business owner to know the true value of their company, particularly so when a divorce might alter the fate of the business itself. Your business valuation can be a powerful tool for keeping your operations intact even after the division of marital assets.