What Are Some Business Valuation Methods During A Florida Divorce?
Many people know that during a divorce, some of their property will be divided between them and their spouse. While many people first think of their home, vehicle, and furniture, there are other types of property, as well. For business owners, their company may also be subject to division. Before a business can be divided, it must first be determined whether it is marital or separate property. A valuation must also be conducted to determine the business’ worth. Below, one of our Tampa asset and debt attorneys explains further.
Is a Business Separate or Marital Property?
To determine if a business is subject to division during divorce, you must first determine if it is classified as separate or marital property. Separate property refers to assets and liabilities one spouse acquired prior to the marriage. Marital property refers to assets and liabilities one or both spouses acquired during the marriage.
Clearly, if a business was started during the marriage, it is usually considered marital property. The only exception to this is if there is a premarital or postnuptial agreement that stipulates that the business is considered separate property. Many people think that if they started their business prior to getting married, it is automatically classified as separate property, but this is not always the case.
Any time marital and separate property is commingled, the asset becomes marital property. For example, if funds from a marital bank account were used to support the business, it could be considered marital property. Or, if profits from the business were used to support the household, that could also classify the company as marital property.
If you are a business owner going through a divorce, it is essential that you speak with a Tampa asset and debt attorney who can help you determine if it is separate or marital property.
How to Value a Business During Divorce
Generally speaking, there are three ways to value a business during divorce. These are as follows:
- The profit approach: This is the most common way to value a business during divorce. The value of the business is determined according to the present or anticipated profits of the business. If the value is based on the future value of the business, an appraiser will apply a formula to determine its current value.
- The market approach: With the market approach, an appraiser finds comparable companies and uses them as a guideline to determine the business’ value.
- The cost approach: This strategy is also referred to as the asset-based approach. This approach uses the theory that a buyer will not purchase the company for more than the value of the company’s assets, accounting for the business’ liabilities.
Our Asset and Debt Attorneys in Tampa Can Value Your Business
Dividing a business is one of the most complex issues in divorce. At All Family Law Group, P.A., our Tampa asset and debt attorneys can determine if your company is separate or marital property, and properly value it to obtain a fair outcome. Call us today at 813-672-1900 or contact us online to schedule a free consultation with one of our experienced attorneys and to learn more about how we can help.
Source:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0000-0099/0061/Sections/0061.075.html
