Divorce is typically a complex process that can become even more complicated when a business is involved. Valuing a business owned by the divorcing spouses can be critical to fairly dividing up property in the process, which is why working with a business valuation lawyer is so important.
If you’re going through a divorce that involves a business, you should understand that the process can be complex and the outcome can impact your financial future. Fortunately, the Dickinson, TX business valuation lawyers at Hannah Law, PC are here to help.
Call us today at 281-262-1311 to schedule your personalized consultation!
What is a Business Valuation Lawyer?
Valuing a business for the purpose of determining fair distribution of assets in a divorce is a process with numerous elements that have significant legal implications. A business valuation lawyer ensures that everything is done in accordance with the law.
What Information is Used to Determine Value?
Business value is based on different essential information reviewed with the help of a valuation expert. Here are the different types of information used for the valuation:
- What the Business Owns (Assets): Reviewing the assets owned by the business such as inventory, machinery, equipment, and intangible assets such as shares, patents, trademarks, and goodwill to determine both their individual and collective value.
- What the Business Owes (Liabilities): Identifying the business liabilities for the purpose of understanding their importance and ensuring that the divorcing spouses share the resulting responsibility while dissolving the marriage.
- Business Profitability: It is also important to assess the profitability of the business by deducting all its current and future expenses from its present and prospective future income to make sure that all parties receive their rightful share.
How is the Value of a Business Determined in a Divorce?
A business valuation may use one or more of the following methods to ensure that divorcing spouses know the value of assets they own:
- The Income Approach: It involves analyzing the future earning potential of the business to determine its worth. It is based on the company’s cash flow for converting prospective future profits into current market value, considering the possible risks of failure.
- The Assets Approach: It involves adding all the company’s assets and liabilities to determine its value. The liabilities are deducted from the assets and the difference shared equally between the divorcing spouses.
- The Market Approach: It involves determining the sale price of the business based on similar businesses that have been sold. Fair market valuation principles are employed while other essential factors such as the company’s role in community and customer relationships are also taken into consideration.
Types of Business in Divorce Valuations
Under Texas law, any property acquired during the marriage is considered community property, regardless of the spouse that acquired it, which includes businesses. Still, there are exceptions to this rule such as property that has been gifted to one spouse or inherited or property acquired prior to the marriage.
If a business is determined to actually be community property, it is important to have an accurate assessment of its value for the purpose of the divorce. The first step is determining the type of the business since this will determine the valuation methodology to be used.
Sole Proprietorship: A sole proprietorship’s value includes all the assets held by the business.
Partnership: It’s only a partner’s interest in the partnership that’s considered the property of one or both spouses. Assets of the partnership are owned solely by the partnership and aren’t divisible in a divorce.
Corporation: It’s only an individual’s interest in the corporation that can be valued and divided, but not any assets that the corporation owns.
Once the type of business has been determined, a qualified appraiser can use any of the aforementioned methods to actually value the business.
How We Can Help You
Our business valuation lawyers in Dickinson, TX at Hannah Law, PC can be incredibly helpful during a divorce by accurately valuing any businesses or commercial interests that are a component of the marital estate. Here are some of the ways we can help:
- Undertaking a thorough valuation of the business: Our business valuation lawyers can work with financial experts to undertake a thorough evaluation of the business, taking into consideration its earnings, assets, liabilities, and growth potential.
- Identification and valuation of intangible assets: While intangible assets are generally hard to measure, they can still have a big influence on a company’s worth. Our business valuation lawyers can help you identify and value these intangible assets such as brand recognition, intellectual property, and customer connections.
- Analyzing Financial Statements: Our business valuation lawyers can help you review financial statements along with other relevant documentation to ensure that all the business assets and liabilities have been accounted for and there aren’t any hidden expenses or debts.
- Negotiating a fair settlement: Once the business has been valued, our business valuation lawyers can help negotiate a fair settlement between the parties, taking into consideration each spouse’s priorities and interests.
- Testifying in court: If the case goes to trial, our business valuation lawyers can testify as expert witnesses, providing evidence that supports the valuation and helping to explain complex financial concepts to the court.
Overall, the highly skilled and experienced business valuation lawyers in Dickinson, TX at Hannah Law, PC can help ensure that the business is valued accurately and that the division of assets in the divorce is fair and equitable.
Contact Our Dickinson, TX Business Valuation Lawyers!
A business valuation is an intricate process that can have a significant impact on your family law case in Dickinson, Texas. From estate planning to divorce, understanding the worth of your business is key to ensuring a fair legal outcome.
Our experienced Dickinson, TX business valuation lawyers at Hannah Law, PC will not only guide you through the complex legal process but also ensure adequate representation of your financial interests. If you are facing a family law matter that requires business valuation, call us today at 281-262-1311 for help.
