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In Massachusetts For Over 30 Years


In Massachusetts For Over 30 Years

How is the value of a business determined?

On Behalf of | Oct 14, 2019 | divorce |

When divorcing spouses own a business in Massachusetts, getting it properly valued is important to determine the fate of the company. Whether the spouses hold on to the business, or if one spouse is bought out, or if the business is sold and the proceeds split between the couple, acquiring an accurate value of the company is a must. Here is a look, per Forbes, at the various ways a business is valuated.

A prime place to start valuing a company is the tangible assets that make up the company. Some companies are housed within a building that is rented or leased. However, if the business owns its own building, the property must be valued, as should any other real estate owned by the business. Company-owned equipment, such as computers, printers, modems and manufacturing machines will also need an appraisal.

The profitability of a business is another key factor. Does the company operate at a deficit? Does it have a lot of debt, or is it operating in the black with a steady flow of income? These questions should be answered since a profitable business will have considerably more value than one with a lot of debt and flagging income. Also, the person who appraises your company can use your income flow to determine future growth potential.

Intangible assets are also considered as part of business value. Sometimes property and income numbers do not tell the whole story. Name value is something businesses need for recognition and growth. Bigger companies may have name value that overall contributes to the market worth of their operation. Other business intangibles include intellectual property like copyrights and trademarks.

Spouses who want an accurate appraisal of their business sometimes hire a forensic accountant to go through the company books and records. It is possible for a spouse to conceal the true value of the business through trickery, so hiring an unbiased party can be an asset. Divorcing business owners will have differing needs, so only read this article as information, not as legal counsel for your situation.