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Basics of Business Valuation in a San Diego Divorce

On Behalf of | Aug 23, 2020 | Professional Practice & Business Ownership

What are the basics of business valuation in a San Diego divorce?  One of the most legally complex and financially contentious issues in a divorce is the ownership of a business or professional practice.

If you own a business or are a licensed professional or a medical practitioner with an interest in a professional practice or a business of your own you want to know how to keep your business and how to protect ongoing operations and profitability during your divorce.

If you are the spouse of someone with an ownership interest in a business or professional practice you have in all likelihood contributed a lot to support your former spouse along the way.  You may have supported them while they finished their education or while they sought licensing.  The two of you may have used marital funds to support the business along the way.

California law requires all assets to be divided equally between divorcing spouses. Before an asset can be divided equally, one must know not only the value of the asset itself but the equity it holds.  The process to identify the value of an asset and the equity in that asset in a divorce is known as valuation.

The basics of business valuation in a San Diego divorce lie in the ability to get an accurate value of the business itself and/or the community interest in the business.  What type of business is it?  How does it generate revenue?  There are multiple ways under California law to calculate and establish valuation of an asset.

One strategy of valuation is based upon income.  Another method is the price the business interest would bring if it were offered for sale.  In still other cases, it may be possible to compare the value of similar business interests which have been transacted recently in Southern California.  Some might argue the best method of valuation is to establish the market value of the business less any associated liabilities.

Usually our attorneys hire the expert on behalf of our clients.  Our Certified Family Law Specialists help to guide the method and scope of the valuation.  The experienced family law lawyers at Burke & Domercq have worked with many expert appraisers and can provide sound guidance and counsel.

You will need to learn a lot more about the basics of business valuation in a San Diego divorce in order to protect your interests.  We invite you to review the strong recommendations of former clients and contact us or call 760-389-3927 to schedule an appointment for a remote or socially distanced consultation with one of our experienced Certified Family Law Specialists.