How Is a Business Divided in an Illinois Divorce

 Posted on June 30, 2023 in Divorce

One of the most complex issues in an Illinois divorce is deciding how the marital estate will be divided between the two spouses. This can become even more difficult when the couple owns a business or one spouse has a significant interest in a company. Determining the value of a business is essential for the equitable distribution of marital assets. It is also one of the many important reasons why you should have a skilled divorce attorney representing you.

What Is the Purpose of a Business Valuation?

The primary purpose of a business valuation in divorce is to determine the fair market value of the business. This value needs to be accurately determined for the division of assets, ensuring that both spouses receive a fair share of the business's worth.

Business valuations are usually conducted by professional valuators or forensic accountants. These experts have specialized knowledge and experience in assessing a company’s worth based on various factors such as financial statements, market conditions, industry analysis, and other relevant factors.

How Is a Valuation Done?

Business valuations can be conducted using different approaches:

• Asset-based approach - Calculates the value based on the company's assets and liabilities.

• Income-based approach - Assesses the value by analyzing the company’s present and projected future earnings.

• Market-based approach – Compares the business to similar companies in the industry and considers recent sales of similar businesses.

Business valuations take into account several factors, including:

• The company's financial statements

• Historical performance,

• Revenue and earnings growth

• Market conditions

• Industry trends

• Assets

• Liabilities

• Intellectual property

Another factor that is often included in the valuation process is the “goodwill” of the company. Goodwill is the intangible value attributed to a business's reputation, customer relationships, and other non-physical assets. The valuation process determines the portion of goodwill that is considered marital property, as well as the contributions of both spouses to the business's growth and success.

Independent Review

It is important for both parties to engage their own independent business valuator to review and assess the valuation report. This can help identify any potential errors or discrepancies and provide a more accurate representation of the business's value.

Contact a DuPage County Divorce Attorney

Business valuations in divorce can be challenging and subject to disputes. Different valuation methodologies, interpretations of financial data, and opinions regarding the business's future prospects can lead to disagreements between the divorcing parties. In order to ensure your interests are protected, make sure you have a seasoned Wheaton, IL business valuation attorney advocating for you. Call Davi Law Group at 630-657-5052 to schedule a free consultation.

Source:

https://www.forbes.com/sites/catherineschnaubelt/2019/03/15/how-to-divide-the-family-business-in-a-divorce/?sh=6680e39b42fe