When it comes to owning a business, whether it be a startup, a franchise, a family business, or an established company, having an accurate business valuation is essential when going through an Illinois divorce. An accurate valuation can help to ensure that each of the parties within the divorce can receive fair settlements and a fair split of any debt sustained during the marriage.
Valuation Paves the Way for Asset Division in Divorce
Illinois is an equitable distribution state, meaning that any marital assets will be split fairly. If the business in question was started before the marriage, then it would likely be considered a non-marital asset. If the business was acquired during the marriage, then it will be considered a marital asset. However, determining ownership is rarely this straightforward.
Spouses who can negotiate a property division agreement and avoid the courtroom can save time and money. However, they must understand what the business is worth before addressing it during property division. If the case is litigated, an accurate business apprasial will be needed to be sure that each party receives a fair share of the business.
Determining the Value of a Business
Determining the value of the business requires a thorough review of a business’s financials and other essential paperwork. This may require help from a professional, such as a forensic accountant, appraisal expert, or business valuator. The different methods that go into valuing a company depend on its different structures and purposes. The most common business valuation methods are the market approach, income approach, and asset approach. The market approach values a business by comparing it to other similar businesses within the same industry. It will take into account how comparable sales are to other businesses and any differences that may affect their value. The income approach uses the business's earnings and profits to calculate the business's value. Factoring in the business's current profits and expenses, as well as its future profits and expenses. The asset approach will look at a business based on the value of its assets. It will factor in any items such as property, inventory, equipment, and receivable accounts.
Contact a Wheaton, IL Business Asset Division Lawyer
If you are planning on getting a divorce and owning a business in Illinois, make sure you understand your rights. Working with an experienced DuPage County divorce lawyer to get the guidance needed to carefully and accurately handle the valuation and division of your business assets. Contact us at Andrew Cores Family Law Group or call us at 630-871-1002 for a free consultation today.