When it comes to dividing assets during a divorce, businesses can be a complicated issue. Marital businesses are assets the court must objectively divide. If there is disagreement over what a business is worth or how to divide the martial property, the court may use a business valuator.
Who can be a business valuator?
Business valuators can be financial analysts, business appraisers, certified public accountants, or business brokers. William E. Smith of Divorce Matters tells us, “Having used a number of these professionals in the Denver area, finding the right person makes all the difference. These professionals are experts in estimating the economic value of a business, which is more than the sum of its parts.”
How will they determine the value?
When valuing a business or professional practice in a divorce case, a court “must consider both the tangible and intangible assets, including the accounts receivable, the value of work in progress, and goodwill.” There are multiple methods to valuating a business, the court will make a decision about which valuation method is used.
Why is it important to use a valuator?
In Colorado, the court has power to assign value to a business as long as it can support its conclusion. It will be worth your time to carefully consider the financial circumstances surrounding the business. Every lemonade stand does not have a value worth determining. However, a long-standing business with a long track record of producing income may have a substantial good-will value in addition to the excess earnings it produces, a valuator will give you an objective opinion.
When it comes to determining how much your business is worth don’t take the word of your partner. Using a neutral third party will help both sides know the realistic value of the business without worrying about misrepresentations.