Lombard, IL Business Valuation Attorneys

Skilled Lawyers Assisting With the Division of Business Assets in Lombard, Illinois

If you have decided to end your marriage and get a divorce, the division of your marital assets can be one of the most complex and contentious aspects of the process. This is especially true when a business is involved. Whether a business was started during the marriage or owned by one spouse prior to the marriage, determining its value is a critical step that will need to be taken, and this can help ensure that your marital property will be divided equitably.

Business interests may represent a significant portion of your overall wealth. Miscalculating the value of a business can have long-lasting financial consequences for both parties. In a high net worth divorce, a clear and accurate valuation of business interests will provide a foundation for negotiating a fair divorce settlement and protecting your financial future.

At A. Traub & Associates, our experienced divorce attorneys can help you understand the business valuation process, and we will advocate for your financial interests. We can provide guidance on the best ways to approach financial issues that you will need to address, and through strategic representation during negotiations, we can help you achieve an outcome that will protect your financial interests and your livelihood.

Why Business Valuation Is Essential During a Divorce

When you get a divorce in Illinois, your marital property will be divided equitably, but the split does not necessarily need to be equal. Courts may take steps to ensure that assets will be distributed fairly based on the circumstances of your case. Determining whether a business is marital property, non-marital property, or a combination of both is the first step.

If either you or your spouse started a business during your marriage, the business will most likely be considered marital property, and it will need to be considered during the property division process. If either of you owned a business before getting married, it will typically be considered separate property that will not be divided. However, if a business owned by one spouse increased in value during your marriage due to the contributions of both spouses, a portion of its value may be subject to division, or the business owner may be required to reimburse their spouse for the marital contributions to the business.

When addressing these issues, an accurate business valuation is crucial. This can ensure that both spouses understand the value of a jointly-owned business and the options for dividing business assets. Even if a business is separate property, a business valuation can provide information about the financial resources available to the business owner, which can inform decisions about both property division and spousal support.

An accurate valuation can serve as a basis for negotiating a property settlement, ensuring that both you and your spouse fully understand what the business is currently worth and the value that it will continue to provide to the owner. A proper valuation can also help you understand the tax obligations that will apply to the business owner and any debts or liabilities that may exist.

Common Methods Used in Business Valuation

Several approaches may be used to determine the value of a business:

• Asset-Based Approach: This method calculates the value of the business by assessing its assets and liabilities. It is often used for companies that have significant tangible assets, such as real estate or equipment.
• Income Approach: This method estimates the present value of the business based on its expected future earnings or cash flow while making adjustments for risk. It is commonly applied to businesses with a consistent revenue stream.
• Market Approach: This method evaluates the business based on the selling prices of comparable businesses in the market. It can be useful for businesses in industries with active markets where similar companies have been bought and sold.

Each method has strengths and limitations, and a combination of these approaches may be used to arrive at a fair valuation. If necessary, each spouse may hire their own valuation professional, and any disputes that may arise regarding the accuracy of valuation methods will need to be resolved through negotiation or litigation.

Options for Dividing Business Assets in Divorce

Once you fully understand the value of a business, there are several ways that ownership of the business can be addressed in a divorce settlement:

• One Spouse Buys Out the Other: The spouse who wishes to keep the business may pay the other spouse for their share of the business's value. This may be a lump sum payment or an ongoing payment plan, or the other spouse may retain certain marital assets that have a similar value to their share of the business.
• Sell the Business and Divide the Proceeds: If neither spouse wishes to continue owning the business, or if a buyout is not feasible, the business can be sold, and the profits can be divided between the spouses.
• Co-Ownership: In some cases, spouses may agree to continue jointly owning and operating a business together after their divorce. This option requires a high degree of cooperation and trust, and it will be essential to create a partnership agreement that will outline the rights and responsibilities of the co-owners. This agreement may provide options for a buyout by one party in the future.

Contact Our Lombard, Illinois Divorce and Business Valuation Lawyers

If you need to address business interests during your divorce, you will need to make sure you have legal assistance from a lawyer who can advise you of your options for business valuation and asset division. At A. Traub & Associates, we can help you determine the best ways to protect your financial interests, and we will advocate on your behalf to help you achieve your goals during your divorce. Contact our Lombard business valuation attorneys at 630-426-0196 to schedule a consultation and get the help you need to protect your future.