Division of property in divorce can become much more complicated if one or both spouses own a business. Business interests may be difficult to value, as it requires more than looking at the business’s balance sheet.
Earnings are typically the most important factor in a business valuation. However, many other factors can come into play. One major factor is market value, which can be determined by comparing the business with sales of a comparable business or the price at which the business would change hands between a willing seller and buyer. Intangible assets like goodwill are also considered. Goodwill denotes the value of specific non-monetary, non-physical resources of the business. Customer loyalty and brand reputation are examples of goodwill.
The Denver divorce attorneys at Halligan LLC have extensive experience leading business owners through the divorce process. Our highly skilled and compassionate lawyers can help you get the clarity you need and ensure a fair outcome. By working with highly skilled appraisers, business valuation analysts, and certified public accountants, we will work to protect your business interests and monetize them where applicable. Important questions include but are not limited to:
- Was the business created during the marriage?
- If the business was in existence prior to the marriage, did the business increase in value?
- If the parties are joint owners in the business, how will the business be allocated in the divorce??
- What role have you and/or your spouse played in running the business?
After we get answers to questions like these, we can start developing a case strategy that can protect your business interests. We help clients in Denver with family businesses, corporate interests, retail stores, restaurants, medical practices, construction companies, and more. Clients trust us to guide them through every step of the process. Call today at (720) 608-2361 to schedule a free and confidential consultation.
Factors That Play a Role in Allocating a Marital Estate that includes a Business
A Colorado court cannot technically allocate a business to a non-owner in a divorce proceeding. However, if it involves marital property, courts can value it and consider that value when dividing the rest of the marital estate. When assessing a business in allocation of the marital estate, a range of factors are considered, including but not limited to:
- When the business was founded – Whether the business was started before or during the marriage will be critical to determining its value.
- Whether the value increased during the marriage – When businesses may have been started by one spouse before the marriage, whether that business has increased in value over the course of the marriage can be essential to assess whether there is any marital equity in it.
- How much the business is worth – The value as well as specific assets held by the business, need to be determined prior to allocating the marital estate between divorcing spouses.
As you can see, allocating a marital estate that includes business interests can be complex. To minimize costs and ensure you favorably divide your business during the divorce, contact the attorneys at Halligan LLC today.
Frequently Asked Questions (FAQs)
If you are going through a divorce that involves business interests, you likely have many questions. At Halligan LLC, our Denver divorce lawyers get a lot of questions from clients regarding divorce in Colorado. We hope you find our answers helpful. Feel free to contact us at (720) 608-2361 if you have further questions about your divorce.
What are the main approaches to valuing businesses in Colorado divorce cases?
- Cost: the market value of the assets, or:
- Market: Compare the business with exchanges of similar business, or:
- Income: Consider the income on cash flow to the prospective buyer
What are my options as a divorcing business owner?
If you have business interests and are going through a divorce, there may be a number of options, including but not limited to:
- The value of the business is offset by the value of other marital assets. For instance, one party keeps the home, and another keeps the business.
- Selling the Business
- Doing a Buyout
- Remaining Co-Owners
- You or your ex-spouse sell your share to an investor.
If you or your spouse is not a partner in the business, the determination of the marital value of the business becomes a key factor in asset division. It may be beneficial to consult with professionals on whether to conduct a business valuation. Hiring an impartial expert can help to minimize conflict and keep costs down.
Contact a Colorado Divorce Attorney
If you and/or your spouse have business interests and are going through a divorce, it is advisable that you seek the help of a family law attorney. The Denver divorce attorneys at Halligan LLC are experienced in handling cases involving complex business issues and are ready to guide you through the process to ensure your needs are met. Call us at (720) 608-2361 to schedule a free initial consultation.