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What to know about business valuation during divorce

On Behalf of | Mar 25, 2024 | Divorce

If you are a business owner going through a divorce, your process may be slightly different, as your business may be subject to property division. Thus, it’s vital to know the value of the business sooner.

Here is what to know if this is your case:

Work with a business valuation expert

A business valuation expert can help you determine the business’s fair market value and fair value. Fair market value is the price that you and a potential buyer can agree on if the buyer is not under a compulsion to buy it and you are not under the compulsion to sell it. And both of you are reasonably informed of the relevant facts.

Fair value is, in most cases, the value of the shares on a sale between a willing buyer and a willing seller. And it’s governed by the state’s statutes.

The professional you work with will use these standards of valuation to determine the correct value depending on New York laws.

Be informed about double-dipping

Anyone ordered by the court to pay spousal support may experience double dipping, but business owners are more likely to. Double-dipping is when an asset is considered a marital property (which means it’s subject to property division) and a source of income. Thus, the income you generate from your business can be distributed “equally” and still be used when calculating support.

How the business was valued can contribute to this issue. That’s why it’s crucial to hire a valuation expert and stay informed about every step they take.

Business valuation is essential when going through a divorce. You should also consider legal help to make informed decisions throughout the process to protect your financial interests.   


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