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A business valuation is essential in a Texas divorce

Texas couples who decide to end their marriages will be required to divide marital assets. If there is a business involved, many factors will need to be considered before it is divided. Furthermore, a business valuation will need to be done, which could ultimately help the parties determine what will happen to the business.

The decision will also depend on how the business is owned. If both spouses own the business, the decision will be different than if only one spouse is an owner. Whether there are other people who also own a portion of the company will also influence any division. If the company is family owned, the parties will need to decide whether to keep it in the family or sell it.

The value of a business is not simply the sum of its assets and accounts. Every business has some measure of intangible value that typically cannot be touched or seen. Intangible assets such as goodwill, intellectual property and brand recognition will contribute to the value of the business. Without the assistance of an attorney and others who understand how to value intangible assets, the true value of the business might not be ascertained. This could cost one or both parties a significant amount of money.

It is essential that a business valuation be done before Texas residents enter into property division negotiations. Not only does the value of the business affect each party’s decisions, but the amount of the business that is considered to be marital property is another piece of the puzzle. If the business began prior to the marriage, only the value of the business during the marriage might be divided. On the other hand, if the business was started during the marriage, all of its value could be subject to division. Understanding the true marital value of a company could have a significant impact on how all of the assets are divided since one party could “trade” one asset for his or her interest in the business.

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