If you are a business owner, there are various issues that you must address if you get a divorce. Asset division can be a messy process, but when you own a business, there are many more financial aspects that you must consider before you divide your assets and liabilities. When it comes to dividing your property, the state of Illinois uses an equitable distribution process to ensure both spouses get their fair share of the marital assets. This means that your spouse could potentially be entitled to a portion of your business if the business is deemed to be marital property. If not, your spouse could still be entitled to a portion of the profits the business has made during the time you were married, which is why it is important to get a fair valuation of your business before beginning the process.
Business Valuation Methods
When valuing a business during a divorce, there are usually three main options that you have. You can choose to value your business based off of its assets, its market value, or the income it generates. There are benefits and downsides to each method, which is why you should consult with an attorney before deciding.
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Asset approach: Valuing a business using the asset approach method requires you to add up all of the business’ assets, including both tangible and intangible assets. Then, you subtract your liabilities from those assets and you are left with the value of your business. This method can have downsides, such as conflicting ideas about how much each asset is worth.
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Market approach: For a market approach, the business’ value is determined by comparing the business to other similar businesses that have recently been sold. However, this approach is not always possible, especially if your business is specialized or in a small market.
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Income approach: If you value your business by taking the income approach, the value is determined by looking at the revenue your business generates. This valuation method also takes into consideration past performance of the business and what the potential projected revenue may look like.
Our DuPage County Business Valuation Attorneys Can Help
As a business owner, your business is likely one of the most expensive and important assets that you own. Building a successful business can take years, if not decades, of hard work and dedication. At The Stogsdill Law Firm, P.C., we can help you protect your business by helping you accurately value your business and understand your options during asset division. To schedule a consultation with one of our Wheaton, IL business valuation lawyers, call our office today at 630-462-9500.
Sources:
https://www.americanbar.org/groups/real_property_trust_estate/publications/probate-property-magazine/2019/march-april/three-options-a-private-business-a-divorce/