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A business started during the marriage is normally considered to be a marital asset. That means even though the business may only survive if the spouse who operates the business keeps it after the dissolution, the business must be valued and the other spouse is entitled to his/her fair share of the business. A court tries to value a business at the price a buyer would pay for the business without the spouse continuing to work at the business.
A business has many components when valued including but not limited to:
a. the value of the fixed assets such as computers, furniture, inventory, machines and telephones;
b. the value of account receivables minus account payables;
c. the enterprise goodwill. This concept tries to value the business the same way a purchaser would by determining the premium a purchaser would pay to acquire the yearly income that the business generated. Certain businesses have no enterprise goodwill since customers only use the business due to the reputation of the owner. These business are considered personal service businesses that may include, but are not limited to - doctors, accountants and attorneys. These businesses, except for the fixed assets and accounts payable, cannot be valued since no buyer would acquire the business without requiring that the owner maintain his employment with the company. In most cases the spouse who is operating the business will keep it and pay the other the spouse his /her fair share of value of the business.
A business is appraised by a professional appraisal. The cost of the expert is paid by the party demanding the appraisal. The fee of the appraiser is set by the appraiser and not our firm. An appraisal will normally cost at least five thousand dollars ($5,000) and will not include the hourly cost that the appraiser will charge to testify in court or appear at a deposition. | 