Divorce and dividing a business

On Behalf of | May 3, 2018 | High Asset Divorce

Texas business owners who are getting divorced have much at stake when it comes to what will happen with their business, as the business may be one of the most significant assets they have. Dividing marital assets can be a lengthy process made even more complicated if the assets include a business owned by one or both parties.

One of the important issues business owners should be concerned about during this time is determining exactly how much the business is worth. The three methods for determining the value of a business, which are the market, income and asset methods, all require a review of the financial statements of the business as the first step.

The discovery portion of the valuation of a business extends far beyond the analysis of the company’s financial statements, and it is particularly important for spouses who want an accurate determination of the value and who are not part of the everyday business operations. Valuation experts should be allowed to not only review all financial records but also examine the company’s facilities and speak in-depth with management personnel. If the discovery is not as thorough as it should be, important information may be missed and result in an inaccurate valuation figure.

If one or both parties had ownership of some portion of the business before the marriage began, the appreciation should cover only the value that developed during the marriage. However, this should be in accordance with any applicable state laws and the specific factors surrounding the case.

A divorce attorney may litigate to protect the rights of a client involved in a high-asset divorce. The attorney may challenge the valuations of certain assets, such as business interests and real estate, that are used for the basis of complex asset division.