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Law Offices of Rebecca Gonzalez, P.C.
Law Offices of Rebecca Gonzalez, P.C.

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Rebecca Gonzalez

Why a business valuation is crucial in a divorce

Many Texas residents who are married also own their own companies. They pour their blood, sweat and tears into making the business a success and everyone in the family benefits from it as long as the marriage is good. If a divorce occurs, the fate of the business is uncertain. Your spouse might be entitled to a portion of the company, but how much is he or she entitled to? A formal business valuation is typically a crucial part of the process.

It would be a mistake not to involve an attorney in the process. Without one, you might end up giving away more of the business than you need to, which could undo all of your work. The first question that you will need to answer is whether you want to keep the business going after the divorce, or whether it should be sold and the proceeds divided between you and your spouse.

Of course, without knowing what the business is worth, that decision would be more difficult. Determining the value of a business is more than the sum of its accounts and inventory. Other factors such as goodwill also need to be taken into consideration. Once the full value of the company is determined, it will then be necessary to determine what portion of it is considered community property. At that point, the negotiations can begin.

If possible, you and your spouse should consider working out a divorce settlement without the intervention of the court. Doing so could ensure the future success of your Texas business if that is your goal. Having a business valuation to work from provides you with the information you need in order to have fruitful negotiations that could result in a settlement that is satisfactory to both of you.

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