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What to Know About Business Valuation During the Divorce Process

As you go through the process of dividing your marital assets during your divorce, you will need to also consider the value of any business assets you own. If you’re the owner of a small business, you might not have previously tried to come to an accurate estimates of its market value, so the process of doing so during a divorce can become rather contentious.

Fortunately, working with business valuation experts can make the process go a bit more smoothly than it otherwise might. Here are some of the factors you’ll need to take into consideration:

  • Income: How much does your business earn in revenue in a given month, quarter or year? Your income includes all cash received for goods and services, as well as any income related to investments or sales of business assets. Your income minus your expenses will give you your profits.
  • Assets and liabilities: What exactly are your business assets? This includes all tangible and intangible property, from your inventory to your trademarks and intellectual property. Liabilities, meanwhile, are the things that cost you money, such as payroll, loans or goods and services you owe to others. By subtracting liabilities from assets, you can start to form a general picture of what your business is worth.
  • Methodology: There are different schools of thought when it comes to valuating a business. You can use the book value approach, in which the business claims the value of its assets in the corporate books. You can also use the market approach, in which the value is based in large part on the business’s earning capacity.

For more information about business valuation, contact an experienced divorce lawyer in Minneapolis at Appelhof, Pfeifer & Hart, P.A.

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