Options for business division | Katie L. Lewis, P.C. Family Law

If you and your spouse are in a divorce and own a business together, you may be wondering what you should do about it. The first thing is to know how much it is worth.

Once you know the value of the company, you can make a more informed decision about its fate.

Business valuation methods

According to the US Chamber of Commerce, there are three main methods for determining the value of a business, although some owners will use a combination of methods. One approach is market value. In this approach, you will look at similar companies that have sold these amounts and use them as a guide.

The asset-based approach determines the value of a company based on the calculation of its assets and the subtraction of its liabilities. You can go by book value or liquidation value.

The third approach is to gain value. This method calculates the firm’s ability to produce future wealth.

Options for company owners

According to Market Business News, one option is to maintain the business and continue to operate it as partners. If working face to face is not possible, you can be creative. You can work different days, or you both have 50% interest, but one of the partners is silent and does not participate in the daily operations.

If you don’t want to do anything with your spouse, both of you may choose to sell the company and split the profits equally. The third option is for one of you to buy the other partner and own 100% of the company. There is also an option for one of you to sell your stake in the company to someone else who will become a new partner.

As you decide what to do about your company, consider how your choice may affect how the court makes decisions about other divisions of marital property.

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