San Antonio Business Valuation Lawyers
When divorcing spouses own a business, either a portion or all of that business is subject to division in the divorce process. This stipulation is a source of anxiety for many dedicated business owners because it introduces the possibility of losing ownership shares or sacrificing some control of the business that they poured their time, money, and energy into building. These fears are understandable, and we believe it is important to protect your interests in the face of divorce.
At the law firm of Higdon, Hardy & Zuflacht, L.L.P., we understand that the division of business assets is a major concern for any business owner. It is crucial for an owner and their divorcing spouse to retain control over how their business is divided so the decision is not left in the hands of the court. As a business is the source of livelihood for many former spouses, enlisting knowledgeable help when accurately appraising your business is invaluable. Our skilled business valuation lawyers have helped clients all over South Texas with the division of their businesses and have an extensive background in business division and meticulous appraisal. Our legal team works diligently to ensure we achieve the most optimal outcome that benefits the interests of our clients.
Why You Need A Lawyer To Appraise Your Business
It is sometimes possible to appraise the value of your business yourself, but this approach is not recommended. The division of a business in a divorce is one of the most difficult areas of family law. There are many complexities in the business valuation process that are easy to overlook, and valuation experts have to sift through a lot of data, including investments, real estate properties, stocks, and other assets, to determine a company’s value. The process is rarely a surface-level estimation, as the appraiser must account for all of the things that make up the business’ worth, both tangible as well as abstract.
In a contentious divorce, your ex-spouse may also employ a valuation professional, and they may have an interest in distorting the value of the business for their own purposes. You need to be sure that your valuation is accurate and advantageous to your case, and that your lawyer can make a strong argument in favor of their methodology to the court.
Why You Should Hire Higdon, Hardy & Zuflacht, L.L.P.
The divorce attorneys of Higdon, Hardy & Zuflacht, L.L.P. are board-certified in Texas family law, and we understand all the issues surrounding division of property during a contentious separation. We have helped many clients through complex and difficult divorce proceedings, and we can help you as well. We work hard to make sure each client receives the best possible representation and that all of their legal needs are met.
We understand what a stressful time this is—not only are you experiencing serious upheaval in your family life, you’re worried about what will happen to the business you have put so much of your time and effort into, and which you rely on to support you. We understand that details matter, and our firm puts in the work and attention to detail to ensure that your business valuation is as accurate as possible.
Factors in Valuing a Business
If the business was established before marriage, the amount up for division depends on how much the business increased in value since the start of the marriage. However, if the business was started during marriage, the entirety of it is considered part of the marital assets subject to division. Businesses are valued based on:
- What the business owns
- What the business owes
- The business’ income
- The method used to determine the value
- The valuation date
This process involves many complex factors that require comprehensive business knowledge on matters such as tangible and intangible property, the value of intellectual property, and which method of valuation would best serve your interests.
Frequently Asked Questions About Business Valuation
You probably have a lot of questions right now. An attorney experienced in business appraisal is the best source for information about your own case, but here are a few general answers that clients commonly have about the valuation process.
What Standards Can Be Used To Determine The Value Of My Business?
There are several different approaches you can use to appraise the value of a business. An asset approach involves considering the value of all tangible and intangible assets of a business, minus the liabilities. Tangible assets would include real-world items like property, equipment, and inventory. Intangible assets are non-physical things like goodwill and brand recognition, as well as creative assets protected under trademark and copyright. Liabilities include things that would reduce the business’ value, such as loans, debt, and taxes.
An income-based approach to business valuation would consider the economic benefits that the business provides, as well as projected future earnings.
A market approach would compare the business to be valued to other similar businesses that have been sold, in a method akin to that employed by real-estate agents when determining the value of a house. This can be difficult to do with a business, however, as it can sometimes be hard to find businesses to appraise against that are truly comparable.
What Is Calculated Intangible Value (CIV)?
The value of a business is not only measured by tangible assets such as profits and property. To understand what a business is worth, an appraiser must consider intangible, or non-physical, assets as well. Goodwill, brand recognition, copyrights and trademarks, and proprietary technology are all part of intangible value.
It’s difficult to determine how much value these things add to the business, but a skilled appraiser is able to measure these assets. One simple method is to subtract the company’s book value from its market value. This gets at the value that others place on the business, aside from its real-world assets. The drawback to using this method is that the market is sometimes so fluid that it may not provide an accurate picture of the true value of the business. Other methods consider the business’ pretax earnings as well as its average return on tangible assets, and compare that with the industry’s average return on tangible assets. Intangible value is much harder to calculate than tangible assets, but it is an essential part of determining the value of a company.
Will My Ex Automatically Get Half Of The Business?
Texas is a community property state, and as such any assets acquired during the marriage are subject to division as part of the divorce. If the business existed before the start of the marriage, then only the value it has gained since the marriage began would be subject to community property rules. If the business was created after you were married, it would be considered divisible property.
If both spouses jointly own the business, it can be difficult to divide without harming its future profitability. It may be possible to sell the business and divide the proceeds between both parties, or for one spouse to buy out the other. If the divorce is amicable and both parties are able to work together, it may be advantageous for you and your spouse to continue to run the business jointly. In any case, the judge may consider the totality of each person’s estate to determine how to divide the business.
What Red Flags Should I Be Aware Of?
Unfortunately, divorcing spouses sometimes try to manipulate the value of a business in expectation of a divorce. Some signs to watch out for include:
- Your spouse avoids handing over financial records, or tries to stall
- The company is experiencing losses which are not reflected in your spouse’s lifestyle
- Your spouse’s personal expenses are reimbursed by the business
- The business started to have financial trouble around the same time divorce became likely
- Your spouse opens numerous personal, business, or offshore bank accounts
An experienced business division attorney knows some of the common ploys that people use to alter a business valuation, and how to recognize them.
Contact a Business Valuation Attorney
Divorce presents many challenges, but knowing what to expect when dividing your business’ assets can reduce the stress of the process and help both spouses come to an amicable solution. At Higdon, Hardy & Zuflacht, L.L.P., our business division attorneys work to ensure we resolve these matters in a way that protects the interests of all parties involved. Don’t hesitate to contact our San Antonio offices by calling (210) 349-9933 to speak to a member of our legal team about the concerns you may have about your business division and valuation.