Dividing a business in a divorce can be a tremendous task emotionally and practically. There does not exist a specific method to come to the true value of the business, but it is necessary that the truest value is identified because – if not – problems can arise later and one spouse may find him or her suing the other spouse for fraud or another similar criminal activity. Knowing how to obtain the true value of a business during a divorce is the first step of the process.
How is the true value of a business determined in New Hampshire?
For division purposes due to a divorce, there are three different methods that can be used to derive at a pretty accurate value of your business:
- the asset approach;
- the market approach; and
- the income approach.
Each approach takes a unique look at your business, and so it may be worth using all three and then determine the value. In the end, it is up to you and your spouse via the guidance of your respective attorneys.
The Asset Approach
The asset approach employs a simple formula: assets – liabilities = value. Assets include all tangible and intangible assets, from inventory and infrastructure to patents and accounts.
The Market Approach
The market approach compares your business to similar businesses in the market that have recently been sold. This method is like the approach an appraiser takes to determine the value of a property to be sold.
The Income Approach
The income approach may be the most complex approach. It uses a formula among many different formulas for this specific purpose to consider historical data in order to predict future cash flow and profits.
Who calculates the true value of your business during a divorce?
When the business is a small one and a value is relatively straightforward to determine, then the parties themselves or their attorneys may be able to determine and agree upon a true value.
On the other hand, if the business is a little more than simple, an expert – like a Certified Business Appraiser or an Accredited Senior Appraiser – may be needed to value your business. Parties may agree on the expert chosen unless the business has the potential to have a high value, and as such, both parties may retain an expert. In cases where the value is significant, there may be challenges to the value of the business’s worth, and so each expert may be made to testify to how and why they calculated the value.
It is important especially when the value may be significant and the challenges just as significant that you retain a divorce attorney in New Hampshire who understands thoroughly how to obtain the true value of your business for division purposes. This attorney will likely know how to value the business him or herself and/or already have a trusted expert to retain when necessary.
If you are considering a divorce or are already in the process of one and have a business that will need to be valued, contact Tenn And Tenn, PA for your legal needs. You can trust us to uphold your rights and interests during a divorce.