BUSINESS VALUATION FOR DIVORCE
During a divorce, it’s essential to ensure that all assets are divided equally — including businesses. We can help and guide you through the process.
Why Use Forensic Accounting to Value a Business for Divorce
When divorce and matrimonial disputes occur and there’s a family business involved, it’s important to get a clear assessment of how much the company is worth to fairly distribute assets between both parties. Using a variety of valuation methods, a forensic accountant can offer an unbiased view and even act as an expert witness in court if necessary. This provides complete peace of mind for everyone involved.
Forensic Accountant Responsibilities
A forensic accountant instructed to assist with a business valuation will typically be responsible for determining:
- The sum of each party’s interest in the business.
- The sustainable income of each party from the business.
- The liquidity they could extract from the business should they wish.
They can act as a single joint expert (SJE) for both parties, or represent one individual, depending on the nature of the case.
Need Our Assistance?
If you are looking for expert business valuation advice or support, get in touch with our team today.
Free eBook
Business Valuation Guide
Find out more about valuing a business for divorce with our free downloadable booklet.
How to Value a Business for Divorce Purposes
The most important thing when valuing a business — no matter how big or how small — is to try to be as accurate as possible. Estimates help nobody, and can often serve to unnecessarily complicate situations down the line should a mistake be noticed. Valuing a business for divorce purposes typically involves detailed assessments of income, net asset valuation, or dividend yield basis.
The income approach is a method of determining the value of a business by assuming that its current and future value directly correlates to the income it generates. In theory, the higher the expected return the higher the value of the company, and the higher the price a prospective buyer would pay.
The net asset value is determined by subtracting total liabilities from all total assets. A common challenge of the net asset methodology is that often, the value of assets minus the liabilities will be different from the valuation reported on the company balance sheet. This can be due to all manner of factors, including timing.
The dividend yield method of determining business value is primarily used to value a minority shareholding in a company as opposed to one entity owning a majority. The minority shareholders’ return on investment is the dividend they receive from the company. It is generally calculated by dividing the maintainable dividend by the rate of return.
How We Help with Business Valuation and Divorce
Inquesta Forensic has been assisting companies and individuals with their business valuations for decades. We know the ins and outs of the process, as well as the potential stumbling blocks that can lead you astray if you aren’t careful.
Offering a truly bespoke service, we are perfectly placed to assist you with whatever you could need, whenever and wherever you could need it — no matter the case.