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Why is business valuation necessary in divorce?

On Behalf of | Oct 5, 2022 | family law |

When a couple decides to get divorced in Maryland, one of the most important things they may have to think about is the division of assets. This includes businesses and other investments that were acquired during the marriage. That’s where business valuation comes in.

What is business valuation?

Business valuation is the process of determining the fair market value of a business. This can be tricky, especially when it comes to family-owned businesses. There are a few different methods that appraisers can use to value a business, and the chosen method will depend on the type of business and the information available. For instance, the asset approach looks at the value of the company’s assets, while the market approach looks at similar businesses that have been sold recently.

What is the importance of business valuation in divorce?

Business valuation is important in divorce because it can help determine how to divide the couple’s assets fairly. It can also help identify any hidden assets that may be lurking. In some cases, one spouse may try to undervalue the business to keep more of the profits for themselves. Last but not least, business valuation can also help determine alimony and child support payments, which is especially important if one spouse owns the business and the other doesn’t.

Just ensure that you hire a qualified appraiser who has experience valuing businesses and make sure that you take all of the necessary information and family law guidelines into account. You should also be prepared to negotiate if you and your spouse don’t agree on the value of the business.

If you’re getting divorced and you own a business, it’s important to get a professional business valuation. This can help you avoid any potential pitfalls and make sure that everyone is satisfied with the outcome. While business valuation is a complex process, it’s possible to get it right in divorce.



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