The path to a smooth divorce begins with an open discussion of your marital assets. In the state of California, a self-owned business that is acquired during marriage is treated as “community property.” During divorce proceedings, the court will make decisions regarding the division of this community property to ensure both spouses are treated fairly. As part of this process, the court may first require a business valuation to determine how much your company is worth.
Assigning a value to a business is a complex process that is best handled by an experienced business valuation expert. To arrive at a value that is fair and accurate, most California business valuations measure value based on anticipated income, existing assets, or a comparison to other businesses operating in the same market or industry. Here are some common business valuation methods:
There is no single best way to place a value on a California business. The valuer will likely consider a company’s age, industry, size, and asset collection before deciding which business valuation method is the most appropriate.
Not all valuation estimates are created equal. While some are comprehensive, well-organized, and rooted in sound methodology, others are sparse and pieced together quickly without using standard procedures. Failure to choose a qualified valuation professional can lead to inaccurate, incomplete, or unfair estimates. You can avoid these pitfalls by having one of the following specialists value your business:
As you evaluate possible options, look for valuation professionals who hold one of these titles and who handle business valuations specifically for divorce cases. They will be less likely to assign a value that is too high, which could lead to an unfavorable distribution of business assets. Finally, it is wise to ask potential candidates how many years of industry experience they have and inquire about whether their valuations have a proven track record of being well-received by the California court system.
The role of timing cannot be overstated when scheduling a business valuation. In most cases, a business valuation takes place on the day of your settlement or your trial date. The valuation should be an accurate reflection of your company’s worth while you are operating it.
If your business is valued prematurely, you are more likely to disagree with the results. You may need to schedule a second report, which can be time-consuming and costly. Likewise, it is never a good idea to wait until the last minute. A reliable business valuation can take time, and delaying a valuation could prolong your divorce proceedings.
If you are like many self-employed Californians, your business is among your largest assets. So, it is important to take the valuation process seriously to ensure you receive your fair distribution of the business assets. Here are some steps you can take to pave the way for a smooth valuation process:
In addition to following these steps, do not be afraid to question the results of a business valuation. Since the valuation will be used to determine the division of marital property, it’s crucial to speak up and question the results if they do not seem accurate. Even better, your attorney can challenge the valuation on your behalf and lobby for a second valuation.
The single most important step you can take to ensure fair results is to seek the guidance of a San Diego Business Owner divorce lawyer. An experienced attorney can help ensure your business valuation is undertaken by a qualified professional at the proper time. Here are some other ways a skilled divorce lawyer can support you during a business valuation:
Navigating the road of business valuation is not always a straightforward process. But with the help of an experienced divorce lawyer, you can rest assured knowing your business and other assets will be valued and divided fairly.
The Law Offices of Steven M. Bishop are here to deliver the compassionate legal support you deserve during your divorce. For over four decades, we have helped business owners facing divorce save money while obtaining a favorable and fair business valuation. We invite you to contact us today to schedule a free phone consultation. We look forward to helping you secure the best possible outcome in your divorce case.
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