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How Is the Value of a Business Calculated During an Illinois Divorce?

Posted on in Divorce

Western Springs divorce attorney business valuation

Illinois is an equitable distribution state when it comes to the division of assets in a divorce. This means that marital assets are divided fairly, but not necessarily equally, based on the spouse’s financial circumstances, employability, health, and more. Whether a couple is determining their own asset and property division arrangement or the court is issuing a property division judgment, a complete and accurate inventory of the couple's assets must be taken. If a spouse owns complex assets such as a business, the value of those assets must be determined before the property can be equitably distributed.

A Forensic Accountant Is Often Necessary

If you and your spouse agree to do so, you have the option to figure out the business’s value on your own. However, most people do not have the skills needed to accurately value a business. Mistakes made during the valuation of your business can lead to arguments between you and your spouse, an unfair divorce settlement, and unnecessary headaches during an already stressful time. Hiring a business valuator may be the best way to ensure that the estimated value of your business is as accurate as possible. If a more in-depth analysis of the business’s finances is necessary, you may want to hire a forensic accountant. A forensic accountant has special investigative and auditing skills, which he or she can use to thoroughly examine the business. The forensic accountant, if he or she is not also qualified to conduct business valuations, will provide vital information to the valuation professional. If you suspect that your spouse may be lying about business revenue or assets, a forensic accountant is essential to make sure you receive your fair share of the marital estate.

Methods for Business Valuation

There are many different methods for determining the value of a business. An asset-based approach determines the approximate value of the business by subtracting the business’s liabilities from the business’s assets. A market-based approach estimates the value of the business by comparing it to similar businesses that have recently sold in the same area. An earning-value approach considers not only the value of the business currently but also the business’s ability to produce revenue in the future. The expected future cash flow may be estimated using the company’s past earnings and the capitalization rate. The capitalization rate is based on the rate of return someone purchasing the business could reasonably expect to receive.

Contact a Hinsdale High-Asset Divorce Lawyer

If you or your spouse own a business or have other complex assets, do not trust just anyone to handle your divorce. The skilled Cook County divorce attorneys at Botti Marinaccio, LTD. have more than 100 years of collective legal experience. We have helped many clients with complex financial concerns during their divorce. Call us today at 630-575-8585 to schedule a consultation to discuss your needs.

 

Sources:
https://www.valuepointe.biz/business-valuation-vs-forensic-accounting/
https://www.thebalance.com/business-valuation-methods-2948478

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Botti Marinaccio, LTD.

630-575-8585

2015 Spring Road, Oak Brook, IL 60523

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