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Determining the value of a business during a divorce

On Behalf of | Dec 19, 2022 | Divorce

If you are a New Jersey small business owner, you understand the work and dedication that it takes simply to bring your business to a point where it is successful and you are making a profit. Small business ownership takes countless hours and significant input to simply manage day-to-day operations, and divorce can compromise all of the hard work that you put into your company. Property division during a divorce can be particularly difficult when there are business assets at stake. 

One of the most important steps in the division of marital property is determining an appropriate value for the business. The value of the business will dictate how a court decides to handle joint business-related assets, or it may assist in effective negotiations. Whether you are a business owner or simply want to ensure that you receive a fair share of marital property, accurate business valuation is critical. 

The business valuation process 

In order to determine the true value of a business, it will be necessary to carefully analyze all aspects of the company’s operations. The analysis will look at the value of assets, earnings each year, the amount of debt carried by the company, and other factors. While each situation is different, the following are steps that may help you determine an accurate value for a small business: 

  • Determine the true profitability of a business by subtracting all outgoing payments and knowing gross income. 
  • Carefully evaluate all aspects of your bookkeeping when determining a specific number. 
  • Don’t forget to consider the market value of the business, which is the amount you would ask for if it was for sale. 

While there are certain things that can help you come to a certain number, it is difficult to place a dollar amount on the value that you bring to your small business. Whether you want to sell the company, keep your business intact, or seek a specific property division solution, knowing how to value your company is critical. 

Seeking the ideal property division settlement 

There is no one-size-fits-all solution to handling business assets in a divorce. It may be in your best interests to seek professional guidance regarding the ideal way to achieve your goals and seek the best future for you and your company. Before you make any decisions that could affect your future, you may benefit from understanding all of the options available to you.