Business Valuation: Do We Need an Outside Expert?

When two spouses who own a business or a share of a business get a divorce, the business interest between the two can be classified as a marital assets to be divided. Both parties should consider whether it’s in their best interests to consult with an experienced valuation expert and retain a professional to help them ensure an appropriate division.

If there’s a business or business interest to be divided, the first step is the valuation. This is where the situation often gets tricky and why it can be so helpful to have an outside business valuation expert providing insight. It can be challenging to arrive at a fair valuation, especially if one spouse is attempting to manipulate business finances or concealing business assets. Since assets will be divided equitably once a valuation has been achieved, it’s essential that the reports regarding the business and assets are completely accurate from the outset.

There are several things to factor in when determining the value of a business owned in part or whole by a couple: operating expenses and accounts receivable for the company, how the business will be run once the divorce is final, and the reputation value associated with the business.

Once a business valuation report has been received, it should be reviewed with attention on the finer details of the report. There may be several variables inside the report that could be reconsidered. If this is the case, there’s no shame in bringing everyone back to the table and requesting another evaluation. Once the business interests have been divided, it’s difficult, if not impossible, to get more details regarding murky reports and business assets. That’s why it’s essential to move slowly as a party to a business valuation- the details matter not just in the short term but in the long term, too.

Unfortunately, there are many ways that a business owner or the partner who is more involved in the finances can manipulate the appearance of the business value. Having an outside individual assist with this process can level the playing field and ensure that an accurate representation is used to determine the value of the business. One party should not be at a disadvantage in these proceedings, and it can make the process go more smoothly when a third party is at the helm guiding the conversations and document review. Business valuation is not a process that should be rushed, but rather one that should be approached with care.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Edison Avenue website at www.buysellflbiz.com.