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Three Top Issues In Business Valuation During Divorce

Are you a “copreneur”? This word is used to describe a couple who owns a business together, and there are thousands of them across the country. Let’s face it, America is the land of opportunity, and for those that dare to take a risk, opening a business can be very rewarding. There is nothing like being your own boss, and calling the shots every day. But, if you decide to do this with your spouse, it is wise to make sure the agreement is clear and in writing. While no one gets married with the thought of getting divorced, it does happen. And, when it happens to a family that not only lives together but works together, the property distribution issues can become quite complex.

When a couple gets divorced, the Court will make an equitable distribution of their property. What this means is that the Court decides what is fair when dividing the assets and deciding who will pay which debts. This does not necessarily result in an equal split of things, but does result in a split that the Court believes to be fair. If a business is involved, the first step is to determine what value to place on the company. Once that is done, the Court can then make orders with regard to the total value of all assets, and it may be that one spouse ends up entirely with the family store while the other gets other items of value.

Determining the Value of a Business During a Divorce

The top three issues in the valuation of a business are:

  • The profitability of the business
  • The value of the time and work put into the company
  • The overall reputation of the company

To determine what a business is worth, you have to look at its books. And while profitability is one important factor in calculating value, there are other things that are not as easily seen that play a role. It is also critical to look at the value of the work and time put into the company by each party. When a couple decides to hang a shingle and open a store, they give up other employment opportunities. What you gave up in order to build something that is worth having is valuable. Other factors to consider when determining business value are the reputation of the company or its goodwill. What the public thinks of your business is an asset of your business, and it should be included in the final figure.

Handling Complex Property Division in Bergen County, NJ

If you own a company with your spouse and are considering divorce, call Moskowitz Law Group, LLC before you make any important decisions about your business. We can help protect your rights by making sure the business is appropriately valued, and that you receive your share of the value of all of the marital assets.

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