Divorce can be a complex process, especially when assets like a family-owned business are on the table. In such cases, understanding the true value of the business becomes a central issue in the separation.
This is where a professional business valuation comes into play. As an entrepreneur, you should understand how a business valuation serves to ensure a fair division of assets in your high-asset divorce.
Determine the value
One of the primary roles of a business valuation in divorce is to determine the accurate value of the business. When a couple decides to separate, they must fairly divide their assets, including the shared business. A forensic accountant assesses the company’s financial statements, assets, liabilities and future earning potential to arrive at an objective value.
Equitable asset division
A business valuation helps the court make informed decisions about how to divide the business or its value between the spouses. Without a clear valuation, one spouse may end up with more than their fair share, leading to potential conflicts and legal disputes down the line.
Negotiating power
Understanding the value of the business provides you with a strong foundation for negotiation. Armed with this knowledge, you can lead the discussion about how to handle the business in the divorce settlement. This can result in a more amicable agreement and reduce the need for contentious legal battles.
Statistics suggest that the divorce rate for entrepreneurs may be as high as 48%. With this potentiality in mind, accurately valuing your business can be a powerful step toward securing your future.
