If you are are self-employed, or your spouse is self-employed, you’ll need to do a business valuation for your divorce. Proper financial disclosure is required by all parties to ensure that your separation agreement is a binding document. In cases where it can be shown that improper financial disclosure was made, there is a possibility that it could be challenged later in court.
A business that is owned during the marriage is subject to division, just like any other asset the couple has shared. However, depending on when the business was started in relation to the marriage, there may be a need for adjustments.
In order to calculate business assets as part of a divorce settlement, a business valuation is prepared by a Certified Business Valuator, not by you or your lawyer. The business valuator examines the current balance sheet, past tax returns, and looks at the business’s strategic planning for the future.
Businesses are valued in a number of ways. You’ll need to seek advice on how your family business should be valued. Sometimes, it’s based strictly on the value of business assets, and sometimes, the business’s future earnings are taken into consideration.
There are a great many things that are considered in a professional business valuation:
- economic conditions
- the finances of the business
- the business’s assets
- the income the business generates
Below is a checklist of documents your lawyer and certified business valuator will need for financial disclosure.