Why an Accurate Business Valuation for Divorce Matters
Divorce can have adverse effects on a business. Additionally, your business may be the most valuable asset in your marriage. Getting an accurate business valuation for divorce will help you through the divorce process. In addition, understanding the true value of your business is essential to making decisions in your divorce proceedings. In this article, we discuss why an accurate business valuation for divorce matters and why it is important.
Peak Business Valuation, business appraiser, frequently values business for litigation support. If you need a divorce business valuation, it is essential to work with a professional valuation firm you can trust. Peak is happy to provide you with an accurate divorce valuation and help you understand divorce’s effects on your business. Schedule a free consultation with Peak to get started today!
What is a Business Valuation for Divorce?
A business valuation is a financial analysis of a business. During a business valuation for divorce, business appraisers perform a thorough company analysis to determine the fair market value of a business. Valuing a business for divorce can be different than a typical business valuation though. For example, valuation professionals also assess the changing value of a business due to litigation or divorce. This can include using various multiples or applying necessary discounts. See Litigation Valuation for Divorce to learn more.
Effects of Divorce on a Business’s Value
Divorce is messy. In many cases, it can greatly change the value of a business as well. Many variables such as changing partnership participation or asset value fluctuate during a divorce. Having an accurate divorce valuation can help you understand the value of a business during a divorce. Business appraisers consider these factors when valuing a business for divorce. They will assess a myriad of factors and apply possible discounts to the final valuation. Reach out to Peak today to further understand a divorce’s effects on a business.
Key Factors in an Accurate Business Valuation for Divorce
During a business valuation, business appraisers consider a variety of factors to determine the value of a business. As in a typical business valuation, valuation experts analyze the financial statements of a business and use a combination of valuation techniques. Additionally, other external factors caused by the divorce can change the value of a business. While not a comprehensive list, some common factors assessed when valuing a business for divorce are included below.
- Changes in Ownership Interest
- Future Growth and Income Potential
- Changes in Customer Goodwill and Loyalty
- Impact to Assets or Liabilities
Use in Settlement Negotiations
Most litigation cases, including divorce, ultimately end in a settlement. Many law firms estimate that a settlement is reached before the case goes to trial in over 90% of legal disputes. If you are in settlement negotiations, an accurate business valuation will help you reach a favorable outcome. Understanding the market value of your business can help you determine a negotiation strategy. It also facilitates a fair negotiation between the parties when both sides understand and agree upon the fair market value of a business. For this reason, working with a professional third-party business appraiser, such as Peak, is critical.
Litigation Proceedings
If a divorce case does proceed to trial, a business valuation will prove essential. In nearly all cases a judge requires a professional business valuation in order to consider the value of a business in court. Having an accurate business valuation makes the litigation proceeds go smoother and increases the chances of a favorable outcome for all parties. You can also use the divorce valuation report in court with legal counsel to make a case or dispute false claims.
Expert Witness Testimony in Divorce
Using a business valuation in court typically also requires an expert witness. Few judges have a background in accounting or finance and they frequently request expert witness testimony. Judges call expert witnesses to explain the business valuation and testify to its accuracy. In such cases, it is important to work with professional valuators qualified to testify in open court. See Expert Witness for a Litigation Support Valuation for more information about expert witnesses.
Peak Business Valuation can provide an accurate divorce valuation and help you through the valuation process. Peak has a team of valuation professionals with the proper certifications to testify in court. Working with a team of expert business appraisers, such as those at Peak, will simplify your divorce. Schedule a free consultation below to connect with Peak’s team of experts!
Court Ruling or Settlement Result
Whether a divorce reaches a settlement or proceeds to trial, an accurate business valuation will help implement the result. Divorces frequently result in the sale or division of assets or even require the dissolution of a business. In these cases, an accurate business valuation can help facilitate the fair distribution of assets. Peak can also provide asset or machinery valuations when valuing a business for divorce. Read the Importance of a Business Valuation for Divorce to learn more.
Conclusion
Many business owners underestimate the effects divorce has on the value of a business. Divorce forces many changes in a business that can be difficult to account for. As such, obtaining an accurate divorce business valuation is critical. With a business valuation, you will better understand the market value of a business and how to maximize its value. You can also use the valuation report in negotiation or trial and have confidence in the value of your business.
Peak Business Valuation is qualified to provide you with a professional and accurate business valuation. With this valuation from Peak, you can alleviate many stressors a divorce has on a business. Peak has a team of experts who can accurately value your business and guide you through the divorce valuation report. Peak also has a team with the needed certifications to be an expert witness and testify in court. Schedule a free consultation below to get started!
