Every entrepreneur thinks the same thing when a divorce is staring him or her in the face.
“What will happen to my company?”
You spent years building your business, making sacrifices with your lifestyle and time to create something to provide for your family. Something you could be proud of because it didn’t exist until you thought it out and built it up.
You find yourself asking again: What will happen to my business?
There are a number of factors that the court will have to decide before the issue is completely resolved via Florida Statute Section 61.075. For instance, if the business was started prior to the marriage, the company might be considered separate property and thus not subject to the separation negotiations. If it was created during the marriage, especially if the other spouse helped directly or indirectly with the business, the court will likely rule it as a marital asset.
If the second scenario fits your situation, the next issue will be valuation. The court can’t split the marital property equitably if it doesn’t know how much everything is worth. The parties can agree on a valuation professional, such as a certified public accountant, to handle this process.
The appointed individual will need to know if the company will continue operating as an ongoing business or if the business will need to be liquidated. Then the valuation professional will use one of three approaches to determine the final value:
- Income-Based Approach: The professional looks at the money generated and profit earned to make a reasonable projection of future income.
- Asset-Based Approach: The professional basically adds together the value of the assets.
- Market-Based Approach: Much like real estate, the professional will compare the company to similarly situated businesses to find the value range.
There are legal approaches for altering the business’s value, but each of these needs to be carefully considered before being enacted. There are a host of problems that could arise from any hasty decisions.
If you own a business and are dealing with a divorce, contact the Men’s Divorce Law Firm right away by calling 321-DIVORCE. When your hard work is on the line, we’ll put in the work and save you time.