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Assigning value to a business to split it is complicated

| Jul 12, 2019 | High Asset Divorce |

One high-value asset that couples in the upper income brackets often share is a business. Assigning a value to real property is often much easier to do that it is to valuate a company.

Tangible assets like real estate are much easier to assign values. More abstract assets like businesses are a completely different story. This is especially true when companies have very few valuable, physical assets. It’s hard for analysts to assign a monetary value to patents, business connections and trademarks. It’s much easier if a company has a lot of heavy-duty equipment that has a clear value.

Appraisers generally ask why you’re having your business appraised when determining what value to assign it. If an interested strategic investor is seeking to buy it, then the goal will be to make it seem like it has a high value. If the appraisal is being done for tax purposes, then the appraiser will generally set out to determine the company’s market value.

If a company is being appraised to aid a couple in reaching a divorce settlement, the date on which the appraisal takes place matters, as ot can greatly impact the value assigned to the business.

Things can get complicated when former spouses agree to both hold on to a business. It’s easiest if they both end up with equal shares in it. If they don’t and one of them retains majority shares, the spouse with fewer shares should be paid some portion of its fair market value as compensation.

Another complex aspect of the business valuation process is the “blue sky” factor. This has to do with the intangible asset of goodwill. It’s hard to assign a value to the effort that a company has put into building their brand and forging desirable relationships in the community they serve. This often makes for contentious battles over business valuation.

Business value is best described as a combination of business assets, personal goodwill and intangible and tangible values. Fort Myers couples who have valuable possessions including businesses should consult with a high-asset divorce attorney. The one that you speak with should be intent on doing their best to safeguard your interest in your contested Florida case.

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