Pasadena Divorce Business Valuations Attorney
Pasadena Divorce Business Valuations Lawyer
There’s a reason why they say no two divorces are alike – every couple has their own unique set of circumstances. In some instances, the separation of two spouses can be complicated by the fact that they own a business together. Businesses can be difficult to value, especially during divorce proceedings. That’s why it’s important to have an experienced Pasadena divorce lawyer on your side who can help ensure your business is valued fairly.
What Is a Business Valuation?
A business valuation is an estimate of the worth of a company. This can be done for a variety of reasons, but it’s often necessary for divorce proceedings. When spouses own a business together, the court determines how to fairly divide the business between them. This can be a complicated process since there are many factors to be considered, including:
- Company’s revenue. This is typically the most important factor in determining a business’s value. The higher the company’s revenue, the higher the valuation will be.
- Company’s expenses. The court must also take into account the company’s expenses when valuing the business. This includes things like the cost of goods sold, overhead expenses, and employee salaries.
- The value of the company’s assets. The court must consider the value of the company’s assets when valuing the business. This includes elements such as equipment, inventory, real estate, and vehicles.
- The company’s debt. The company’s debt is another factor when valuing the business. This can include things like mortgages, loans, and credit card debt.
- The company’s future prospects. The company’s future prospects include factors such as the company’s growth potential, the strength of the company’s management team, and the overall health of the industry.
Determining Standard of Value
Attorneys in any business valuation must help to determine the standard of value or the definition of value that will be used for the business in question. There are two common standards of value:
- Fair market value. Fair market value is the price that a willing buyer would agree to pay for the business and a willing and capable seller would accept for the business. This is the most common standard of value used in divorce proceedings.
- Fair value. Fair value is the price that would be paid for the business if it were sold in an arm’s length transaction. This is often used when one spouse is buying out the other spouse’s interest in the business.
The Appraisal Process
Once the standard of value has been determined, the next step is to select an appraiser. The appraiser is responsible for estimating the value of the business. The appraiser typically uses one of three methods to value the business:
- The income approach. The income approach values the business based on its ability to generate income. This approach is typically used for businesses that are ongoing and have a history of profitability.
- The asset approach. The asset approach values the business based on the value of its assets. This approach is typically used for businesses that are not ongoing and do not have a history of profitability.
- The market approach. The market approach values the business based on comparable sales of similar businesses. This approach is typically used for businesses that are publicly traded.
Once the appraiser has valued the business, they provide a report to the attorneys. The report includes an estimate of the business’s value, as well as the appraiser’s opinion on the standard of value that was used.
Dividing the Business
Once the business has been valued, the next step is to divide it between the divorcing spouses. This can be done in several ways, but the most common is to sell the business and divide the proceeds. Other options include one spouse buying out the other spouse’s interest or keeping the business intact and dividing the profits.
The decision of how to divide the business is ultimately up to the divorcing spouses. However, the court typically only approves a division if it is fair to both spouses and if it is in the best interests of the business.
Potential Assets to Split in a Divorce
Businesses are not the only property that can be divided in a divorce. Other potential assets include:
- Real estate. This includes the family home, vacation homes, and investment properties.
- Retirement accounts. This includes 401(k)s, IRAs, and pensions.
- Investments. This includes stocks, bonds, and mutual funds.
- Personal property. This includes things like jewelry, art, and furniture.
- Debts. This includes credit card debt, mortgages, and student loans.
What further complicates a business valuation and division in a divorce is when the business is just one asset among many that must be divided. In these cases, it is often necessary to hire a financial advisor to help determine the best way to divide all the assets. This is because some assets, like retirement accounts, can have tax consequences if they are not divided properly.Additionally, multiple assets up for discussion could potentially have a “domino effect” type scenario in which the division of one asset affects the value of another. Creative agreements can be drawn up in these cases to keep the value of the assets as fair as possible while still meeting the needs of both spouses.
How Can a Family Law Attorney Help?
If you are going through a divorce and have a business, it is important to seek the advice of family law attorneys. These highly educated and experienced professionals can help you navigate the process of business valuation and division with helpful tips, relevant case law, and zealous advocacy.
- Deep understanding of business valuation law. A family law attorney can help you understand the complex laws surrounding the valuation of businesses in a divorce. They can also help you select an appraiser and ensure the appraiser is properly qualified.
- Experienced in asset division. A family law specialist can help you understand the different ways that businesses can be divided in a divorce and can help you negotiate a fair agreement with your spouse.
- Familiar with tax laws. A family law attorney can help you understand the tax implications of dividing a business in a divorce and can help you structure an agreement that minimizes your tax liability.
- Protecting all interests. A family law attorney can also help you protect your interests if your spouse is trying to hide assets or is otherwise being dishonest about the value of the business. If you suspect that your spouse is not being truthful, an attorney can help you gather the evidence you need to prove it.
- Negotiate. A family law attorney has a stronger level of negotiation skills than the average person. This is important in business valuation and division cases, as the number of factors at play can create an environment in which agreements are difficult to reach without the help of an experienced negotiator.
Tips for Choosing the Best Family Law Attorney for Your Case
When choosing a family law attorney to help end your marriage, it is important to choose someone who:
- Has experience handling business valuation and division cases. You want an attorney who is familiar with the laws and procedures surrounding the valuation and division of businesses in a divorce.
- Has a strong understanding of finance and accounting. You want an attorney who understands the financial aspects of business valuation and division. This is important to ensure your interests are protected and that you reach a fair agreement with your spouse.
- Has a proven track record of success. You want an attorney who has a proven track record of success in business valuation and division cases. This can give you the best chance of reaching a favorable outcome in your case.
- Is familiar with the local court system. You want an attorney who is familiar with the local court system in which your case will be heard. This is important to ensure your case is handled efficiently and correctly.
Contact the Law Offices of Patricia Rigdon Today
DO YOU NEED LEGAL HELP?
The mediation process provides a more peaceful alternative to fighting about your personal issues in court. Read more to see if divorce mediation is right for you.
Collaboration brings attorneys, mental health professionals & accountants together to resolve family issues without going to court. Read more to see if a Collaborative Divorce is right for you.
Litigation in the divorce process involves submitting issues to family court in order to resolve them with the assitance of a judge, if both parties cannot reach an agreement in other ways. Read more to see if Divorce Litigation will be needed.