Valuing Your Illinois Business During Divorce

 Posted on September 29, 2021 in Business and Divorce

Nobody knows the value of hard work like an Illinois business owner. Businesses require so much investment of time, money, and personal sacrifice that the prospect of dividing your business in a divorce can be gut-wrenching.

Unfortunately, most business owners face the complications of addressing their business in divorce including assessing its value and determining whether it is necessary or even possible to “buy out” their spouse’s share. Here we will try to answer some of the most common questions by small business owners in divorce. It is important to remember that a qualified Illinois divorce attorney is the best source for information about your divorce.

How Do I Know How Much My Business Is Worth?

Valuing a business is one of the trickiest parts of the divorce process. There are three common methods that are used to determine a business’s value, and a business valuation specialist can help you determine which method is best suited to your situation.

• Market Valuation Method - The market method looks at similar businesses in the surrounding area that have recently been sold, and attempts to estimate the likely sales price if the business in question could be sold now. That sales price, minus any debts, then becomes the stated value of the business.
• Asset Valuation Method - The asset method takes a comprehensive look at a business’s overall assets and debt to assess the value of a business. Tangible assets, like real estate, equipment, and savings accounts can be used, as well as intangible assets such as a business’s reputation in the community.
• Income Valuation Method - The income method primarily relies on a business’s past profits to determine its likely future income. The income method is normally used to value service-oriented businesses, like a plumbing business or consulting firm, and businesses with ongoing operations, such as grocery stores and chains.

What if the Value of My Business is Likely to Change?

Markets change frequently and determining the value of a business repeatedly over the course of a divorce would prove impossible. Instead, a court will set a declaration date upon which the fair market value of a business will be set for the remainder of the divorce.

Can I Keep My Business in a Divorce?

As with many questions in divorce, the answer is “it depends.” If a spouse was heavily involved in helping a business grow by working as a bookkeeper, assistant, or secretary, he or she will likely be entitled to a portion of the business’s value. Even if a spouse was not involved in the creation of a business, if the business was started during a marriage, the business will generally be viewed as marital property and spouses will need to divide the value equitably.

Work with a DuPage County Divorce Attorney

Accurately assessing the value of your business is crucial for a fair asset division process. At Calabrese Associates, P.C., we know how hard you have worked to make your business a success - that is why we will work hard to help you keep as much of your business as you are entitled to. Work with one of our experienced Naperville divorce attorneys and start your divorce on the right foot. Call us today at 630-393-3111 to find out how we can be of service to you.

Source:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000