Effective Legal Counsel From A Pender County Native

3 ways to value your business before your divorce

On Behalf of | Aug 7, 2020 | Divorce |

If you own a business, you likely want to continue to lead it after your marriage ends. In North Carolina, though, divorcing spouses typically receive an equitable share of the marital estate. If you started your business after you walked down the aisle, your soon-to-be ex-spouse may have an ownership interest in it. 

Before filing for divorce, you should try to determine how much your business is worth. After all, you may have to plan to buy out your husband’s or wife’s ownership interest. For divorce purposes, three valuation methods are popular. 

Market valuation

Market valuation determines the worth of your business based on what it would likely bring on the open market. If you choose this valuation method, you consider comparable business sales. Nevertheless, finding comps may be challenging, especially if you have a one-of-a-kind business. 

Asset valuation

Asset valuation uses what your business owns to determine its value. The following assets may be relevant in your calculation: 

  • Cash 
  • Investments 
  • Inventory 
  • Equipment 
  • Accounts receivable 
  • Intellectual property 

Income valuation

Income valuation is often the easiest way to determine a business’s worth. With this valuation method, you simply consider how much your venture brings in every month. Cash flow and income projections may help you determine a realistic income-based valuation. 

Whether you use income, asset or market valuation, you may come up with vastly different results. Accordingly, you may want to determine your company’s value using each method. This approach may put you in a better position to assume exclusive ownership of your business.