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Do I Need to Estimate My Small Business’s Value in My Texas Divorce?

Posted on in Divorce

b2ap3_thumbnail_fort-worth-divorce-lawyer.jpgWhen a Texas business owner gets divorced, he or she faces several difficult challenges. First, the business’s value must be assessed. Second, the value must be divided between spouses as part of the marital asset division. And third, the business owner’s personal attachment to the business must be navigated as the business is treated as an objective asset rather than the product of years of painstaking personal investment. 

If you are getting divorced in Texas, do not leave the fate of your business to chance. Read this blog to get an overview of how small businesses are valued in a divorce and then get help from an experienced divorce attorney who can connect you to business valuation professionals. 

Small Business Valuation Methods

The value of a business can change quickly, making it important to choose a specific date on which the business’s value will be estimated and then applied throughout the asset negotiation process. While the method used to determine your business will depend on several factors, including the type of business you have, there are three methods that are used most often when assessing a small business’s value. These are: 

  • Asset method - The asset method takes the value of a business’s assets and subtracts the business’s debts. The remainder is the business’s value. While it may seem that this method would make many businesses appear to be worth little or nothing at all, intangible assets like the business’s reputation and community awareness could raise the value of the business to make it appear more realistic. 

  • Market method - Much like estimating the value of a home, the market method gathers information about similar businesses that are for sale or have sold in comparable locations and then generates an estimate for the business in question by comparison. This method works better for businesses like nail salons or pizza parlors, which sell frequently and have many competitors. For boutique or unusual businesses, the market method may be less beneficial. 

  • Income method - Using a business’s tax returns, profit statements, and ongoing contracts, the income method assesses a business’s value by trying to determine its current and probable future income. 

Schedule a Meeting with a Dallas-Fort Worth Marital Asset Attorney

Small businesses add a significant layer of complexity to a divorce. Fortunately, with the help of an experienced Dallas-Fort Worth divorce attorney, you can assess your business’s value and fight to retain your fair share of its worth. Call the Clark Law Group today at 469-906-2266 to explore your options in a confidential consultation. 



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