Valuing a family business can be difficult in any instance, but particularly difficult in dealing with Divorce. The value will likely have an impact on settlement and division of assets as the business is often either a marital or a mixed-marital asset. The value and compensation of the officers may also impact resolution of child and spousal support.
The value of the business may be zero, as is the case of many self employed individuals who have limited assets. This may include self-employed accountants, lawyers, repairmen, construction workers, trainers as well as many other groups. The “value” is that the person running the company IS the company. The LLC or corporate oversight only gives them the ability to earn a certain annual income. The question is: If that person left the company, would there be any company to sell?
Often there is a value to the business. The client list, email distribution and goodwill are assets in addition to the physical assets such as buildings, vehicles, equipment, furnishings and computers. Other assets may include leases and contracts.
The value may be agreed to between the parties, so it is good to understand what and how the business works. If not agreed, the parties may agree on a business valuation expert as is often the case in collaborative divorces. Alternatively each party may hire a business valuation expert and/or the court may appoint its own expert.
If you or your spouse owns a business, it is important to have an attorney familiar with business valuation in order to resolve your divorce. Michael Bouldin has a business degree in economics and 25 years handling divorce/dissolution cases in Cincinnati and Northern Kentucky. For consultation, please email firstname.lastname@example.org, call 859-581-6453 (*581-MIKE) or fill out the contact form.