A family-owned business can be a very valuable asset in a divorce case. Usually, it is necessary to value the business in order to fairly settle the case.
Click here to read a very detailed article about how businesses are valued in divorces in Texas.
In general, the value for a business used in a divorce case is the “fair market value,” or what a willing buyer would pay to a willing seller. Book value for a company is almost never used in divorce cases.
Usually, a certified business valuator is used as an expert witness to value a business. A business valuation can cost anywhere from $7,500 to well over $50,000, depending on the size and complexity of the business and the reputation of the expert.
Several key factors play a big role in determining the value of a business in a divorce:
- Does the spouse own 100% of the company or a minority share? The value will be reduced if the spouse owns less than a majority of the company.
- Does the spouse actively run the business or does he or she just own the company and let others do the work?
- If the current owner sells and sets up a competing business, will that affect sales? This issue is called “personal goodwill.”
- Is there currently a buy-sell agreement in place for the business?
Valuation of a business in a Texas divorce is a complicated subject and a husband or wife involved in a case dealing with a family-owned business will need an experienced divorce attorney and probably a good business valuation expert.