If you or your spouse are involved in any capacity with owning or operating a business, you could benefit from a business valuation in your divorce settlement. In short, business valuations measure a business’ value, which a court will apportion in a divorce settlement. New Jersey law maintains that the value of a couple’s business will be apportioned equitably during divorce, which means the business value will not be split 50/50. Business values are instead apportioned based on a variety of factors specific to the parties who own or are involved with the business.
The Family Law Offices of Megan S. Murray is prepared to help you work toward a fair business valuation and settle your case equitably. Contact us at (732) 858-0282 to schedule a consultation to discuss the specifics of your case.
How Business Valuations Work
An accountant will complete a business valuation for the purpose of presenting information to a court so that it can apportion that value equitably to those involved in a divorce settlement. Business valuations thus require rigorous and thorough documentation.
A business valuation generally includes the following steps:
- Using your lawyer’s counsel, you will hire a joint or individual evaluator, depending on whether you and your spouse want to share an evaluator or hire your own.
- Both your lawyer and your evaluator will have you complete and provide necessary documentation for the business valuation.
- You should also have your evaluator complete a cashflow evaluation for the compensated spouse; doing so will save you time and money and provide you with further information that you can use for aspects of your divorce settlement, such as alimony and child support.
- Once you know the value of the business and the cashflow of your spouse, you can begin the settlement process with confidence that you have all the information required to get what is fair.
The Three Methods of Business Valuation
In New Jersey, there are three generally accepted approaches to determining a business’ value. It is possible that each approach could yield different values. It is essential that you understand the methods of valuation to ensure the person performing your valuation will use an approach that suits your business best.
- Income/Capitalization: The income/capitalization approach to valuating a business compares the income a business provides its owner(s) and the business’ expected future performance. From this comparison, the method anticipates future profits, which are used to determine the business’ value.
- Market: The market approach to business valuation determines a business’ value by comparing and aligning it with similar businesses or assets that have recently been sold on the market. A market valuation is like a business evaluation, except for the purposes of your divorce case it will require more thorough documentation to confirm the market-based value.
- Cost: The cost approach to business valuation considers how much it would cost to develop and run the business as it is. Then, a cost approach valuates the business based on the sum of the development and maintenance costs.
Megan S. Murray
"Megan S. Murray is the founder of The Family Law Offices of Megan S. Murray. Megan founded her practice with a singular goal in mind: to provide quality, hands-on services to her clients. Megan has earned a reputation among her peers, colleagues and clients as a zealous advocate of the highest integrity, who achieves the best results for her clients through an intimate knowledge of the unique facts of each case and extensive knowledge of the law."Read Full Bio
Brian R. Murray
"Brian R. Murray, Esq., of counsel to The Family Law Offices of Megan S. Murray, is a highly experienced New Jersey attorney whose practice areas have included civil litigation, real estate, complex insurance litigation, and family law."Read Full Bio
Equitable ApproachMegan's goal is to reach the best possible settlement with the understanding that it is equitable to all parties.
Extensive ExperienceMegan's knowledge of all the nuances of the law has resulted in favorable outcomes for her clients.
Hands On ApproachMegan is dedicated to making herself readily accessible to clients through timely communication and prompt responsiveness.