How are Businesses Valued During Divorce Proceedings?
Marital assets are eligible for division during divorce as per New Jersey equitable distribution laws. So what exactly does that mean for business owners? Simply put, owned business assets are considered in a similar fashion to other owned assets such as your family home, retirement assets, and much more. A key difference is how difficult it can sometimes be to assign an accurate value to businesses during a divorce. It is important to understand how the business valuation process works, who is involved in this process, and how that all ties in to your divorce.
The business valuation divorce attorneys of Jacobs Berger have extensive experience helping our Morris County clients from towns like Morristown, Madison, Randolph, Tewksbury, Dover, Denville, and across Northern New Jersey divide business assets amicably and fairly during divorce. We take the time to understand your individual needs and concerns, and will explore all of your available options during divorce proceedings. Our attorneys focus on offering the dynamic legal solutions with the goal of reaching the best outcome for your unique situation.
Call our office for a confidential and comprehensive case assessment to learn more about the business valuation process, how it may tie into your divorce, and how we can best serve your needs.
Equitable Distribution Attorneys Discuss Business Valuation Process
During divorce proceedings, our Madison equitable distribution attorneys will work with you and your spouse to determine the fair value of all marital assets. When it comes to businesses, these valuations can be complex due to fluctuating values, different types of ownerships, and financial projections which extend well into the future. Here are some common methods used to valuate businesses:
Asset vs. Liability Method – the simplest and fastest method of determining a business’s value is the asset vs. liability approach. This method take the assets, subtracts the liabilities, and spits out a figure which is a rough value of the business.
Market Value Method – this method finds comparable businesses and uses their sale price as a starting point. This method is only useable if there are comparable businesses to reference.
Income method – examining cash flow, profits, salaries, and more can also be used to valuate a business over the coming years.
Business Asset Lawyers Use Experts to Valuate Owned Businesses
While the above methods are all useful tools, there is no replacement for a consultation with an industry expert. Our Randolph business asset divorce lawyers have existing relationships with experts in a wide array of disciplines, and will likely call upon their testimony to give an accurate valuation of your owned business.
It is worth noting that expert witnesses will give the most accurate valuation, but may not be necessary in all cases. For example, if your owned business represents a very small portion of your overall assets, you and your spouse may agree to use a simpler method of valuation as discussed above. There is no one-size-fits-all solution, and discussing your unique needs with an attorney will help guide your decision making process.
What is Equitable Distribution and How Does it Impact my Divorce?
Pursuant to New Jersey equitable distribution laws, marital assets must be divided equitably (fairly) during a divorce. What this means is that even if your business is eligible for division, your spouse is not necessarily entitled to half and vice versa. The degree to which each spouse may be entitled to a portion of the owned business can depend on a number of factors including:
- The duration of the marriage
- The financial and time equity each spouse put into the business
- Whether or not the business was owned before the marriage
- The nature of the owned business (closely held, sole proprietorship, etc.)
- Sacrifices made by either spouse to allow the business to grow and/or appreciate
- Prenuptial or postnuptial agreements if any exist
- Much more
At the end of the day, there are many different ways in which you can choose to divide your business. Our Morris County equitable distribution attorneys will assist you no matter what option you and your spouse choose, but the process will always begin with a fair and reasonable valuation of your owned business venture(s).
Contact our Business Asset Division Divorce Lawyers Today
At Jacobs Berger, our business asset division divorce lawyers take pride in serving clients from local Morris County communities and across all of Northern New Jersey. Our attorneys work hard to mitigate the financial and emotional stressors of divorce, all while focusing on delivering the effective legal solutions our clients need and deserve. We believe that the legal process is never a cut and dry affair. For this and many other reasons, we reject the cooke cutter legal service of some larger firms.
If you have any questions or concerns when it comes to your business assets during a divorce, please contact us online or over the phone by calling our Morristown offices at (973) 710-4366 today for a confidential and comprehensive case assessment.