One of the most contentious issues in divorce proceedings is dividing property and assets. This can be especially challenging when a couple owns a business together. In such cases, business valuations are an integral part of the property division process. CA Certified Family Law Specialist Judy L. Burger understands the intricacies of business valuations in a property division.
She has numerous long-term working relationships with area Forensic Accountants and Actuaries, Ligation Real Estate Appraisers, Real Estate Attorneys, Business and Corporate Attorneys, Title Companies, and Real Estate Professionals who assist her when business valuations are needed for a divorce case.
Let’s explore this topic a bit further.
What Are Business Valuations?
Business valuations are the process of determining the economic value of a business or company. It is a complex process that involves analyzing the financial records of the company, its assets, liabilities, market competition, and other relevant factors. The value of a business includes various factors, including, but not limited to the following:
- Profitability
- Growth potential
- Future earnings prospects
- Market competition
- Industry trends
- Capital structure
- Market value of assets
- Company management
A jointly-owned business is considered to be an asset in divorce cases and is subject to division between the divorcing spouses. This can often be challenging because each spouse may have differing options about the value of the business, and some of these may be difficult to quantify objectively. As a result, disputes and conflicts are common.
Attorney Judy Burger works with respected professionals who are experienced business valuation experts to help overcome these challenges. They partner together to thoroughly analyze the financial records, assess assets and liabilities, and consider other relevant factors that impact the company’s value.
Methods of Business Valuations
Selecting the correct valuation method is one of the most critical factors in business valuations. Several valuation methods are available. Choosing the best method depends on the type of business, its size, and other relevant factors. Judy Burger and her team of experts choose the most appropriate method for valuing the business.
There are over a dozen different business valuation methods, but these are the most common:
Asset-based Approach
Also called the book value method, this valuation method is based on the value of the company’s assets, including its tangible and intangible assets. The expert will consider the value of the company’s assets, such as its inventory, property, and equipment, and subtract its liabilities to arrive at the net asset value of the business.
Income-based Approach
This valuation method is based on the income generated by the business. The expert will assess the company’s historical and projected earnings and apply an appropriate capitalization rate or discount rate to arrive at the present value of the business.
Market-based Approach
This valuation method is based on the market value of similar businesses. The expert will analyze the sales of comparable businesses and arrive at a fair market value for the business being valued.
Times Revenue Method
The times revenue valuation method uses a multiplier dependent on the industry and economic environment of the business. It is applied to a stream of revenues generated over a certain period of time.
Get Help with Business Valuations and Property Division in a CA Divorce
Establishing the correct value of a business in a divorce case can be a challenging process, so it requires skills and expertise. Certified Family Law Specialist Judy Burger works with experienced valuation experts to ensure a fair and accurate valuation of your business. She is tenacious regarding fairness and preserving your rights throughout the divorce and property division journey.
Contact The Law Offices of Judy L. Burger for more information and to schedule a consultation.