The attorneys at Stok Folk + Kon thoroughly understand the nuanced issues surrounding business valuation in the context of a divorce. If you need advice about how to assess the true value of an enterprise in the Fort Lauderdale area, you should consider contacting one of our experienced divorce lawyers. We take pride in mastering the details of this area and have a forward-thinking approach when it comes to analyzing financial information. Our knowledge can give you a significant edge when it comes to protecting your interests during the division of marital assets.Techniques of Business Valuation
There are a number of situations in which business valuation can be helpful in a divorce. Enterprises involved may include family-owned businesses, consulting businesses, professional practices, and more. A business can be assessed according to either its ongoing value or its liquidated value, but it is more common to use the ongoing value if it is expected to survive past the divorce. Valuation experts like CPAs typically become involved, since this process can be highly technical.
Three main standards can be used in assessing the worth of a business upon divorce. These are the market-based approach, the asset-based approach, and the income-based approach. The market-based approach relies on comparisons to similar businesses that have recently been sold or are about to be sold. This system of valuation is often considered the most accurate, although problems can arise when a business is very distinctive or has accumulated substantial goodwill, which can be hard to quantify.
To compensate for any potential problems with this approach, many valuation experts will adjust it by using the other two approaches. Under the asset-based approach, the expert decides how much money the assets of the enterprise would be worth if the business was liquidated in a sale. If the marital business actually is being liquidated, this may be the most effective method to use. The income-based approach is more dependent on conjecture, for it attempts to compare the current net value of the business against its projected net value in five years. This becomes very complicated and potentially inaccurate if one of the spouses not only owns but also runs the enterprise. Valuation experts usually adjust for risk and market conditions when using this method.
It is important to note that there is one significant part of a business that is not considered a marital asset and thus will not be divided upon divorce. This is goodwill, which is the part of the enterprise’s value that arises directly from the owner. It would not be appropriate to divide this value between divorcing spouses because only one of them was responsible for creating and maintaining it. Goodwill can be difficult to estimate, but whatever value is attributed to it will remain a separate asset of the individual who established it.Discuss the Division of Assets with an Fort Lauderdale Lawyer
No matter the eventual outcome, the process of business valuation usually is expensive and arduous because of the need to retain experts and the depth of the investigation required. Many couples opt to resolve the division of a business through settlement negotiations rather than sinking substantial resources into a more protracted dispute. The family law attorneys at Stok Folk + Kon are familiar with the complexities of balancing the well-being of an enterprise with the rights of each spouse who has an interest in it. We will help you decide what strategies make the most financial sense for your long-term needs. Our lawyers will work closely with accountants and financial experts to develop a solid understanding of the interest of each spouse in the property. We proudly represent clients in Hollywood, Fort Lauderdale and throughout Florida. To learn more, call us at (954) 237-1777 or contact us online to set up an initial consultation.