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The Importance Of A Proper Business Valuation

Properly valuating and dividing your business in a divorce may be more than a matter of mathematics. Your livelihood and financial future may depend on having it done properly. As an experienced family law attorney, I understand the importance of these matters. I am Amilcar J. Perez, and I will stand up for your rights and advocate for your financial interests throughout the divorce process.

New Jersey is an equitable distribution state for dividing marital property in a divorce. If your business is considered marital property, you will need to have your business valuated for the distribution process. You and your spouse can create your own agreement regarding how to divide your assets, including your business, but if you cannot agree, the court will make the decision for you.

Accepted Business Valuation Methods In New Jersey

If you and your spouse can agree on how to divide your assets in your divorce, you can choose among several business valuation methods. In some situations, the company’s governing documents will require a certain method for valuation. Common methods include:

  • Fair market value – This method looks at the value of the business on the open market by comparing the recent sales of similarly situated businesses.
  • The income approach – This method bases the value on past revenue and predictions of future income and projected profits.
  • The asset method – This approach uses a formula comparing business assets and liabilities, including equipment, real estate and inventory.

Although these sound simple, they are quite complex and require an experienced professional business valuator, along with the guidance of a skilled attorney. I understand the issues involved with high-value assets and complex divorce matters.

What Method Does The Court Prefer?

Most state courts have preferred methods for valuating a business. In New Jersey, courts will generally use the “fair value” method. This means analyzing the value the business has to the owners, rather than a “fair market value.” Sometimes the fair value involves taking the fair market value and applying certain marketability discounts. The court should balance the value between the spouses to come up with a fair and equitable method of assigning interests. I will advocate for your interests when the court reaches this step in the divorce process.

Contact Perez Family Law Today

I am here to help you understand the best option for you and your business. To schedule a free initial phone consultation, please call my New Brunswick office at 732-201-6435 or fill out my online contact form today. Se habla español.