You may have had a dream to one day own a family business. After getting married, those dreams may have become a reality, and your business may have thrived in a manner that allowed you and your spouse to feel proud and accomplished. However, if you now face the possibility of divorce proceedings, you may wonder how your business will fare when it comes to property division and other related processes.
In order for your business to go through division proceedings, the value of the business plays an important role. Commonly, however, individuals disagree when it comes to the value of the company. As a result, an outside professional typically takes on the task of determining the value. In order for this action to occur, the valuation professional must determine a standard of value.
Standards of value
Professionals often utilize one of two types to obtain the standard of value. These types include:
● Fair market value: This type of value typically refers to a price on which a buyer and seller would most likely agree. The buyer and seller taken into account usually have no obligation or pressures to buy or sell, and, therefore, no urgent aspects get factored into the estimate. However, certain minority discounts often do play a role in fair market value estimates.
● Fair value: This second type of value does not utilize minority discounts when determining an estimate. However, this estimate may take certain factors into account relating to the costs of acquisitions, production, distribution and replacement. Additionally, this value comes from the court presiding over your case.
Because each of the standards of value could result in widely different estimates, professionals must make sure to utilize the correct type. The correct type varies depending on state statutes, and, therefore, understanding the jurisdictional statutes for your case may prove important.
The various aspects that go into consideration when it comes to determining business valuation can have a significant impact on not only the value of your company but also on other outcomes of your high-asset divorce proceedings. Keeping all of the necessary factors in order may prove overwhelming, but you do not have to do it alone.
Because your business undoubtedly means a great deal to you, you may want to consult with your Georgia attorney in order to ensure that you understand how your business valuation may be determined and how divorce may affect your company.