Business valuation can be key in divorce

On Behalf of | Nov 12, 2021 | Divorce |

When a person decides to get a divorce, it is often one of the most challenging times of their life. Emotions can run high during this time, but many important matters need to be worked through. If one spouse is part of a family business, it is crucial to make sure it stays protected. A business valuation is key during a New Jersey divorce.

When there is a business involved in a divorce settlement, questions quickly abound, including:

  • How much is the ownership worth?
  • Do both spouses have ownership in the company?
  • Is the business a marital asset?
  • Will one spouse buy out the other spouse’s ownership?

 These questions are the reason that a valuation needs to be done by a qualified professional. There are no two businesses that are alike, and there are many factors that affect a business. There are typically three approaches to valuing a business:

  1. Asset approach. This calculates the value of the business based on the company’s underlying assets and liabilities.
  2. Market approach. This determines the value of the business by comparing it to similar companies that have sold in similar markets.
  3. Income approach. This approach values a company by using prior and current economic data to project future economic benefits and converting those benefits to a present value.

A valuation expert may use more than one of these approaches when valuing a business. A legal professional who is skilled in high-asset divorce can advise their client on what their options are during the property division portion of the divorce settlement. They understand that their client’s business and future is on the line and will make sure it is protected.