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Determining your company’s value during a divorce

| Jun 17, 2020 | Uncategorized |

When an Oregon couple decides to end their marriage, it is likely that they have numerous details to consider. The specific concerns for each couple can vary, and you may feel the need to focus on how divorce will affect your company. It likely took a considerable amount of work to reach the point of sustainability with your business, and you undoubtedly do not want ending your marriage to jeopardize it in any way.

Unless you took steps to completely keep your business off the table during divorce proceedings, which is not easy to do, the value of your company will likely come into play. As a result, you will likely need to go through a valuation process to obtain the needed information.

How can you value your business?

Determining the value of a business is not necessarily an easy task. However, multiple options exist for figuring out the economic value of your company. Some of those options include the following:

  • Times Revenue Method: This valuation method involves taking a stream of revenues over a particular time period and applying it to a multiplier specific to the company’s industry and economic environment.
  • Market Capitalization: This method determines value by multiplying your company’s share price by the number of outstanding shares.
  • Earnings Multiplier: This option calculates business value by adjusting the company’s price-earnings ratio and accounting for current interest rates.
  • Liquidation value: This value amount stems from the cash your company would receive if you liquidated all of its assets and paid off all debts.

Of course, these examples do not represent every business valuation method available, which is why it is wise to explore your options. Some methods offer a more straightforward and simple approach, but others could offer a more accurate value. It is also wise to ensure that someone accredited in business valuation carries out the process to ensure its accuracy and reliability.

Using valuation in divorce

The value of your business could play a significant role in your divorce proceedings, especially when it comes to property division. Your soon-to-be ex-spouse may have a claim to a portion of the business assets, and you certainly do not want him or her ending up with more than necessary. In order to better understand your options for protecting your business and its interests as you end your marriage, you may want to address this particular concern with an experienced attorney.

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