In California, a business or professional practice owned by one or both spouses should be valued to determine the community property interest which is then divided between the spouses upon a divorce.
The Law Offices of Edward Misleh, APC is a Sacramento law firm, located in Sacramento, California that practices California family law and California divorce law. We represent clients in Sacramento, California and in Northern California with services they need and deserve when addressing California divorce, California community property, and division of California retirement plans. Call now our Lawyer Hotline. We offer a free consultation to all new clients. Affordable rates and payment plans are also available. Call now 916-443-1267 for your free consultation.
Business valuation is a process and a set of procedures used to estimate the economic value of an owner’s interest in a business or professional organization. Evaluating a business or professional organization may be necessary during a divorce so that both parties fully understand the economic impact of the investment.
Business valuation is used by financial market participants to determine the price they are willing to pay or receive to affect a sale of a business. In addition to estimating the selling price of a business, the same valuation tools are often used by business appraisers to resolve disputes related to estate and gift taxation, divorce litigation, allocate business purchase price among business assets, establish a formula for estimating the value of partners’ ownership interest for buy-sell agreements, and many other business and legal purposes such as in shareholders deadlock, divorce litigation and estate contest. In some cases, a forensic accountant may be necessary as the joint expert doing the business valuation.
Some of methods used to value a business include:
- Fair market value – a value of a business enterprise determined between a willing buyer and a willing seller both in full knowledge of all the relevant facts and neither compelled to conclude a transaction.
- Investment value – a value the company has to a particular investor. Note that the effect of synergy is included in valuation under the investment standard of value.
- Intrinsic value – the measure of business value that reflects the investor’s in-depth understanding of the company’s economic potential.
- Going Concern – value in continued use as an ongoing operating business enterprise.
- Assemblage of assets – value of assets in place but not used to conduct business operations.
- Orderly disposition – value of business assets in exchange, where the assets are to be disposed of individually and not used for business operations.
- Liquidation – value in exchange when business assets are to be disposed of in a forced liquidation.
CALL NOW TO MAKE AN APPOINTMENT FOR A FREE CONSULTATION