You probably decided to start a business for many of the same reasons you chose to marry your spouse. Not only does your business provide you with financial stability, it also allows you to grow as a person. While your marriage is now on the rocks, your business may continue to thrive. Accordingly, before you file for divorce, you must think about the value of your commercial venture.
If your business is successful, your soon-to-be-ex-spouse probably wants some of its profits. If it operates in the red, however, you may wish to distribute losses with your ex. Either way, you must know how much your business is worth to best plan your divorce.
Your business may be an area of contention
Pennsylvania law is relatively clear on the distribution of marital assets following a divorce. The process becomes trickier, however, when assets include a business. If you started your company before you met your spouse, you may not want to give him or her any portion of it. On the other hand, your spouse may think your business has a greater value than its books show. Regardless, you should realize your business may be an area of contention during divorce proceedings.
Your valuation approach matters
Generally, market value and book value are two primary ways to value a business. As you may suspect, your company’s value depends on which approach you choose. If you elect to rely on the market value of your business, expect to show how much prospective buyers would likely pay to purchase your company outright. The book value, by contrast, is the worth of business assets after depreciation.
Your valuation may have a shelf life
Pennsylvania courts enjoy wide latitude in determining the value of your business. Still, you can likely improve your position by investing significant time in calculating your company’s value. You must be careful, however, as your valuation may have a shelf life. If you do not finalize your divorce anytime soon, your numbers may no longer reflect the actual value of your business when you choose to finalize the process.
You have many things to consider when choosing whether to file for divorce. No matter if your company is worth a little or a lot, you must know its valuation to best navigate divorce proceedings. Once you know how much your company is worth, you can pursue a fair dissolution of your marriage.