If you are a business owner preparing to go through a divorce, one of your biggest concerns may be what happens to your business. One of the first things a court will do is work to place a value on your business. Many different factors go into determing business valuation. These formulas for business valuation are constantly evolving. Valuing a business is a difficult task…especially for an Illinois courts. As you know, there are many reasons for a business’s success so it’s hard to determine what actually accounts for a business’s value. This article tracks the Illinois courts’ opinions on how to value a business. It includes what factors they will consider, proposed methods of valuation, and what pieces of a business may (or may not) be divisible in your divorce. As with every article, the cases will be updated in the coming months and years as Illinois courts release new opinions. Dep’t of Pub. Works & Bldgs. V. Ass’n of Franciscan Fathers, 69 Ill. 2d 308, 315 (1977) If your business is on property that is due for a potential rezoning, that may affect the value of the business. The business’s value could go up or down depending on how the zoning will affect the property and surrounding area. “It is proper to base value upon the highest and best use permitted, not only under existing but also under other zoning classifications where there is reasonable probability of the granting of such zoning in the near future.” Olsher v. Olsher, 78 Ill. App. 3d 627, 635 (Ill. App. Ct. 1979) If you own part of a closely held company, your stocks are not listed on any stock exchange. They’re not easily bought and sold, and therefore difficult to value. Further, an older value for stock cannot dictate the current value of the stock. Courts have also traditionally recognized some value derived from the ability to make decisions and share in profits. So, courts will treat stocks in a closely held company as assets with a value they can calculate. “The value of stock fluctuates freely with the operation of the business. Therefore, a past value would not give the trial court an accurate idea of the stock’s worth.” “In a close corporation the corporation’s shares are not listed on a stock exchange or actively dealt in by brokers and, therefore, there is no established market for the corporation’s stock. […]
