McKinney Business Valuation Attorney
Business Valuation Issues in Divorce
Accurately evaluating the true value of a small business, professional practice, or large company is critical to achieving fair property settlements no matter which spouse you are representing. But like families themselves, each business needs to be looked at and understood as the unique entity it is.
At Loughmiller Higgins, we understand the complexities of business valuation and both how, and how not to approach this critical aspect of complex property division. A significant distinction between a business valuation for Divorce verses a valuation for a sale of business to third parties is the allocation of discounts for intangible assets such as good will and non compete agreements.
In a divorce the valuator has to assume that personal good will is not an asset of the community estate and therefore cannot be included in the value of the business. The valuator must also assume that a party can freely compete with his spouse after divorce. The ability to compete can result in a significant discount in the community value of a business. Contrary to this rule in a divorce, most arms length sales of business include a value for non-compete agreements between the purchaser and seller of the business. Our firm works with business valuation specialists in the context of divorce cases who can evaluate, compare and contrast results achieved through approaches involving:
- Market comparison
- Adjusted book value
- Income Approach
- Liquidation value
Of course no matter how the business valuation is conducted, the division of marital assets and debt can become a battle of experts that cost both spouses a significant amount of money and aggravation. For this reason, we emphasize weighing the cost of litigation against the value of the estate to be divided and the potential outcomes that can result from retention or foregoing retention of expert witnesses.
For answers to your questions about business valuation and complex property division in the State of Texas — call our Craig Ranch law offices at the crossroads of McKinney, Frisco, Plano and Allen, Texas or e-mail us with a brief description of your situation and concerns. Our attorneys accept all major credit cards and offer flexible appointment scheduling for your convenience.