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Conducting Business Valuations In Divorce

During a contested divorce in the state of Texas, all property must be identified as community property or separate property. While each case is different and unique, in general, all assets and liabilities acquired during the marriage are community property. Everything acquired prior to and after the marriage is separate property. However, there are exceptions, and it is a case-by-case assessment.

Once an asset or debt is characterized, it must be valuated and then divided equitably between the parties. This does not always mean a 50-50 split. What can complicate this matter even more is if the assets include a business entity or multiple business entities. Businesses are some of the most complex properties to evaluate in a divorce. In fact, not all attorneys have the skills, resources and knowledge to handle this complicated area of property division.

Business valuation or complex property division case in Texas? Contact our highly skilled and experienced business valuation attorney at Patricia L. Brown & Associates.

Complex Property Matters Can Arise In A Texas Divorce

Fortunately, at Patricia L. Brown & Associates, our lead attorney is very experienced in working with business valuations. Attorney Brown has specific knowledge and experience when it comes to divorce, particularly high-asset divorce matters that involve business entities. From professional partnerships and small businesses to larger companies and corporations, she can help you thoroughly valuate the business by working with the right experts. This is not a simple process, so it is important that you have a seasoned divorce lawyer handle this issue on your behalf.

Thorough And Experienced Business Valuation Services

In a contested divorce, a business valuation is necessary when one or both parties own a business entity. This could be a joint professional association or partnership, such as a physician’s practice or law firm. This can also mean a small business, partnership, LLC or larger business, even a corporation. No matter how big or small your business may be, we will approach your business valuation matter with catered and knowledgeable legal counsel.

At its most basic level, the valuation of a business will examine the real estate property owned by the business and actual tangible property acquired by the business over the years. In addition, the past, present and future earnings of the business need to be taken into account. There is also an intangible aspect of “goodwill” that can be looked at, which is the value that the individual may bring to the business himself or herself.

In business valuations, a business evaluation professional will be required. This may be a business valuator, financial expert, CPA or accountant. There can be multiple experts involved in order to properly value a business and present the information concisely to the other party and the court.

Business Valuations And Divorce FAQ

The process of business valuation and property division in divorce can be complex and confusing from the outside. The following are general answers to some of the most frequently asked questions our firm’s clients ask.

How Does The Presence Of A Prenuptial Or Postnuptial Agreement Affect The Division Of Business Assets In A Divorce?

Prenuptial and postnuptial agreements are essentially contracts between spouses, in which they agree on how they will divide their marital property if they ever get divorced. This can include an ownership interest in a business. Unless one spouse can prove that the prenup or postnup agreement is invalid for some reason, the court will usually abide by its contents regarding the division of the business’ assets.

How Might A Divorce Affect Future Business Operations When Both Spouses Were Actively Involved In The Business?

It is not unusual for a married couple to both work for a family-owned business, though it is not necessary that a spouse be directly active in business operations to be entitled to an equitable share of the business’ assets in divorce. Generally, there are three common ways of dividing a business:

  • One spouse buys out the other’s share
  • The spouses sell the business to a third party and divide the proceeds
  • The spouses continue to own the business jointly post-divorce

What Are Some Of The Challenges Faced When Using The Income-Based Valuation Method For Determining The Value Of A Business In A Divorce?

The income-based method seeks to reach a business’ value by predicting its future earnings, using factors like the firm’s expected future profits and cash flow, and the current value of future earnings variables that might affect those earnings. This approach can work well for businesses with a strong history of profitability. However, despite assistance from experts in the field of business valuation, factors affecting the economy cannot always be predicted with full confidence.

Contact Knowledgeable Williamson County Complex Divorce Lawyers

Tell our team of dedicated complex divorce lawyers about your specific case. No matter what type of business entity you may need assistance with, we can help you. You can schedule an appointment by calling our Austin & Round Rock, Texas, divorce law firm at 512-436-0826 or toll-free at 866-369-3211. You can also contact us online.