Divorce Lawyer Colorado

A divorce lawyer knows that asset division is by far one of the most complex parts of divorces for many couples, and this is only magnified if a family business is involved. In order to get an accurate estimation of a business’s value for purposes of the marital estate, professionals are typically consulted, but even after a value is obtained, the business can still be a bone of contention between both spouses.

How Is the Value of a Business Determined?

Depending on the nature of the business itself, there are three different types of methods used to arrive at a figure in terms of actual worth.

The first is simply listing all available assets – physical, intellectual, and personnel. This is the best approach for companies that are very young, usually those just barely making a profit.

The second is the market approach, which is most often used by valuation professionals and involves estimating future earning potential by a company’s place in the market.

The third is referred to as income valuation, and it involves estimating future potential and then adjusting downward to arrive at current values.

Who Determines Which Approach Is Best for My Situation?

Which approach works best for your business is best determined by a professional valuation expert, often an appraiser or Certified Public Accountant (CPA). A professional is best equipped to fairly and accurately assess the worth of the business, and a professional will also have the best access to all the relevant information. It is sadly common for one spouse to hide information from the other during a hostile divorce, especially if that spouse is more involved with the business than the other. Your divorce lawyer will help you determine which approach is best for your divorce case.

What Does “Goodwill” in Business Valuation Mean?

One question that can make a valuation more complex is the issue of personal and professional goodwill as a business asset. Professional goodwill is loosely defined as the tangible value of the benefits that buyers obtain when they purchase a business, such as local knowledge, experienced workers, and an established company brand. This is different from personal goodwill, which speaks more to a worker or owner’s ability to run their business and is not an asset that can be valued in tangible form.

Many states recognize personal goodwill as an asset, with multiple court decisions specifying that while enterprise or professional goodwill can outlast one person’s individual involvement in a business, personal goodwill follows a person, and will usually not stick to the business, so to speak, once that person has ceased to be affiliated with it. Thus, a discount may be assessed for personal goodwill, but not for professional goodwill, as it goes along with the business.

Contact a Family Law Firm Today

To find out what legal options there are to help you obtain the back child support you are owed, call Zweig Law, PC to speak with a dedicated Colorado divorce lawyer. Call our office today to schedule a free and confidential consultation.