Getting An Accurate Valuation Of Your Business For Your Orange County Divorce
When a business owner is going through a divorce, the value of their business will play an important role in their asset division process. Knowing the correct value of a business can ensure that you are negotiating for a fair trade for other assets if you want to keep or give up your share, or want to see to it that you are not paying more than you have to keep your business. Getting an accurate valuation is easier said than done, but it is possible with the help of an experienced California family law attorney.
At Maggio Law Orange County Divorce Attorneys, we have more than 50 years of combined experience representing clients throughout the Irvine area. We know how important it is to protect the best interests of our clients in their family law needs, including the unique needs of divorcing business owners, and we do everything we can to pursue the outcome they deserve in their cases.
What Is Business Valuation?
In California, business valuation can help spouses determine how much their business is worth during divorce. To determine that value, an appraiser will look at things like its:
- Market value
Business valuation can help both spouses advocate for a fair percentage of what the business is worth. What spouses deem “fair” can vary. Our Orange County divorce lawyers can help you advocate for your best interests in these scenarios.
How To Get A Business Valuation In California
Getting a business valuation in California can require hiring a certified public accountant. They can use various approaches to determine how much your business is worth. Here are a few they may use:
- Sales comparison approach: This examines the sales price of other businesses in the area and modifies them based on relevant factors.
- Cost approach: Here, the CPA determines how much it will cost to replace the business’s depreciating assets to that of buying a similar business.
- Income approach: The CPA estimates the value of a business by considering the previous years’ financial performance and future predictions about financial performance.
Concluding which option is best for you can depend on many factors. We can help you evaluate your options based on your circumstances.
What Documents Help With Your Business Valuation?
Here is a list of all the paperwork you potent need for your business valuation:
- Tax returns
- Asset records (for fixed and depreciated assets)
- Liability records
- Supplier agreements
- Market data about your industry
Having all these documents available is crucial for a comprehensive valuation. We can help you ensure you have all the paperwork you need.
Who Gets The Business In A Divorce?
Like any other asset in the property division stage of divorce, both spouses have the opportunity to negotiate for a resolution of dividing the business, or it will go to court, and a judge can decide. As your legal representation, our goal is to help present your strongest case to a judge to secure the outcome you are pursuing, or develop a negotiation strategy to settle things outside of court. Before either outcome can be achieved, we must first know the value of the business in question.
Is A Business Considered Separate Or Community Property?
This can depend on a couple’s circumstances. For example, California courts may consider a business separate property if you started it before your marriage. However, courts may consider that community property if your business accumulated significant value throughout your marriage.
On the other hand, if you started the business during your marriage or you started the business with your spouse, both of you could be entitled to half of its value.
Factors That Go Into Determining The Value Of Your Business
The value of a business is more than the time and effort you put into making it successful. Common factors that attribute to the final value of the business include the business’s profitability, growth potential, current and future market conditions, any intellectual property, the customer base, its assets and liabilities, and operational efficiency. We are prepared to track down this information to ensure we are dealing with all the necessary facts in your division process.
Options For Splitting Your Business After The Completion Of A Business Valuation
The impact a divorce has on a business can shape the future of the company for years to come. There are three typical outcomes of a business going through a divorce process:
- Buyout – The spouses agree to a resolution where one spouse buys the other’s share of the business, either through a cash purchase or by giving up other assets in the divorce, like a vacation home or other property.
- Partnership – Both spouses maintain their current arrangement of ownership. While the ownership may not change, the level of each spouse’s involvement may change, like one spouse becoming a silent partner.
- Divestment – If neither spouse can come to an agreement for the above outcomes, or neither spouse wants to continue owning the business, they may sell the business and split the money from the sale, often based on the percentage of ownership each spouse has.
One of the ways we help our clients is by keeping their expectations flexible in these matters. As we represent you, we will act as your advocate to keep your emotions calm, and you focused on your best interests rather than one part of the whole process.
Common Business Valuation Issues
Going through a divorce can be challenging enough. Trying to value your business amid your divorce can come with additional obstacles. Here are some of the most common ones people can face:
- Finding accurate financial information
- Separating your personal biases from objective data
- Placing value on the business’s brand and other intellectual property
- Complying with quick changes in regulatory compliance
- Trying to value a business when market conditions are uncertain
We understand how navigating all these obstacles can be difficult. That’s why we’re here to help.
We Are Here For You
Whether you want to keep the business or just make sure you get your fair share in your divorce, our experience can be the advantage you deserve. Call a lawyer you can count on at 949-227-3001 or email us here to schedule your initial consultation today.