If you’re getting a divorce, your business may be one of your most important assets. Perhaps you and your spouse are joint business owners, so you both have a claim to the company. Or perhaps the business has grown significantly during your marriage, and so that increase in value counts as marital property – since it was essentially “earned” during the marriage.
Either way, you may need to do a business valuation to determine exactly what the company is worth and how to split this asset between the two of you. There are a few different ways to do this.
Inventory and assets
One option is to consider the inventory and assets that the business owns. If it’s a restaurant, you may have tens of thousands of dollars in kitchen equipment. If you manufacture products that you sell online, you could have a warehouse full of unsold inventory. You add up the value of everything the business owns and split this between you and your spouse.
The value of shares
Another thing to consider is if the company is publicly traded. You can then look at the number of outstanding shares. When you multiply this number by the overall value of each share, you get the remaining value of the company.
Income projections
Finally, you can just look at how much money the company is earning and your projections for the future. This can help you account for growth if your business’s value is constantly going up. You can sometimes multiply this, such as demonstrating that the value of the company is three times the value of yearly revenue.
No matter what tactic you decide to use, this type of property division can get very complex. Take the time to carefully look into all of your legal options.