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How Are Businesses Valued During a Divorce?


Businesses are often many couples’ largest and most valuable asset and, as a result, the fair division of a business may be one of the most important aspects of a divorce. Before any business can be divided among its owners, a precise valuation of the company must first be conducted. If the valuation is done incorrectly, a spouse risks losing significant amounts of money in their largest asset. At Diggs & Sadler, our attorneys have the financial and legal skills necessary to adequately evaluate a divorcing couple's business to ensure that an equitable division of assets will be reached.

Factors Determining the Valuation of a Business

Businesses can be divided in many ways such as market value, potential earnings, and perceived worth. It requires significant financial expertise to determine in what way a couple should value their company to ensure that each spouse receives his or her fair share. Concurrently, many factors must be accounted for in the proper valuation of a company, some of the most influential factors include:

  • Annual earnings of the company
  • Predicated profitability of the business
  • Current and future market conditions
  • Intangible assets
  • Outstanding debs

Texas divorce courts utilize a market value approach to evaluate the worth of business. In this method, many intangible assets such as goodwill and reputation may not be accounted for, thus, reduce the value of a company. Consequently, when businesses need to be divided, it may be best to seek mediation or another alternative dispute resolution so that the value of a business is not diminished

Contact a Houston Divorce Law Firm

If you or someone you know is a business owner and is in need of legal representation for their divorce proceeding, it is imperative to have an accurate and precise valuation of your company so that you do not lose out on its worth. At Diggs & Sadler, our attorneys understand how emotionally taxing a divorce may become. We strive to protect our client's best interests so that they can rest assured during their divorce proceedings. Contact our office at (713) 766-5355 to learn more about how we may assist you in your business valuation.

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