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Diamond & Diamond, P.A.
NJ FAMILY LAW ATTORNEYS

HIGH-QUALITY REPRESENTATION
IN DIVORCE AND FAMILY LAW
MATTERS

Diamond & Diamond, P.A.
NJ FAMILY LAW ATTORNEYS

HIGH-QUALITY REPRESENTATION
IN DIVORCE AND FAMILY LAW
MATTERS

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Possible approaches to determine the value of your business in a divorce

| Apr 21, 2021 | Divorce |

New Jersey business owners who face divorce naturally have concerns about losing part of the company they have worked so hard to build. When both spouses had a hand in the enterprise, dividing a shared family business becomes even more difficult.

Review the approaches you can use to estimate the value of your business for the purposes of negotiations with your estranged spouse.

Income approach

This method projects the future income and cash flow of a business based on its current and historic income and cash flow. Because the income approach provides a fairly accurate look at expected return on investment, it remains the most common way to value a company.

Market approach

When you sell your home, the real estate agent prices it based on “comps,” or similar properties that have recently sold in your neighborhood. While the same concept applies to the market approach, it can be difficult to use this method unless you have recent competitor sales of very similar businesses to review. If you have a unique product or service, that could be a tall order.

Asset approach

This valuation method uses the company’s tangible and intangible assets to estimate value. Tangible assets include real estate, inventory, equipment and other physical property. Intangible assets include intellectual property such as patents, as well as accounts receivable. Adding these items and subtracting all business liabilities provides a straightforward estimate.

Without a current professional valuation, you may find that you lose more than your share of the company to your spouse. Taking this step can help protect your finances after divorce in New Jersey.