St. Charles Business Valuation Divorce Lawyers

Experienced Business Valuation Divorce Attorneys for Clients in St. Charles

Virtually all aspects of a divorce settlement become significantly more complicated when a business is involved. First, the value of the business must be determined for the purpose of the division of property, and this is rarely a simple process. Part of the challenge stems from the wide variety of businesses that exist, and the vastly different assets, income, and expenses that they have. In addition, there are several different methods that can be used to determine the value of a business, and one method may be more advantageous to you than to your spouse. Second, both the value of the business and the income it generates must be documented because both will factor into spousal maintenance and child support calculations.

Thus, it is crucial to retain an attorney who understands the complexity of divorces involving a business and who will not hesitate to bring in financial experts to analyze both business and personal records to ensure that you are not cheated in the divorce.

The attorneys of Weiler & Associates, Inc. have handled divorces for many business owners over our decades in practice. Once we understand your goals for the business going forward, we will do our utmost to help you achieve those goals.

Protecting a Non-Marital Business. If you are trying to protect and grow a business that has been characterized as non-marital property, we will look for ways to protect your cash flow so that your ability to invest in your business is not hampered by exorbitant spousal or child support. If you have children, we can present this in a positive light to your spouse, since a healthy, stable business can provide significant benefits to the children.

Getting Your Fair Share of a Marital Business. Suppose that, during your marriage, your spouse began developing a business, and you supported that effort by managing the family and household arena or by working for a bigger company so that the family would have a steady income and insurance benefits. Even if you played no role in the business, it would still be a marital asset subject to division, so we would want to make sure that its valuation is as high as possible to maximize the value of your divorce settlement.

Business Valuation Methods in Illinois Divorce

Under Illinois law 750 ILCS 5/503(k), the value of a business will be set at its fair market value as of the date agreed by the parties or ordered by the court. However, determining the value of a business is much more complex than appraising the value of a house or car. Depending on the method used, you could arrive at very different appraisals of value. A business valuation expert can apply more than one method to see which is most advantageous for your situation.

Three common approaches are:

• The market approach, which looks at recent sales of comparable businesses and the likely price that might be obtained if the business were put up for sale now.
• The income approach, which looks at the business's tax returns, profit-and-loss statements, and customer contracts to quantify the business's earnings over the past few years and estimate future earnings. A variation of this method, the discounted income approach, reduces future earnings estimates based on specific business risks, such as trends in demand for specific products or services where the business is located.
• The asset approach, which adds up the current value of the business's assets, including accounts receivable and enterprise goodwill, minus any outstanding debts. Enterprise goodwill is the value of a business beyond its physical assets-such as public awareness of a restaurant's name and reputation-which remains of value to the business even if ownership changes hands. When the asset approach is used, keep in mind that the book value of an asset in the business's accounting records may not be an accurate reflection of the current market value and that a specialist may be needed to appraise unique items.

Some variables related to business valuation have been clarified through Illinois court rulings. For example, much of the value of a professional practice-e.g., doctors, lawyers, and accountants-stems from the individual practitioner's personal skills and reputation. The same can hold true for skilled trades such as custom carpenters, stone masons, and mechanics. This is termed personal goodwill and because it is not transferable to any buyer of the business, the courts have ruled that it should not be considered as part of the business valuation and therefore is not subject to division in a divorce.

Valuation of a Partnership or Corporation

When the business is structured as a partnership or corporation with multiple owners, then the partnership, shareholder, and/or operating agreements may specifically address the question of business valuation. These documents may also provide information relevant to the value of the spouse's share of the business assets and income, such as spouse's share of ownership and the degree of control that the spouse in question has over business decisions such as the distribution of earnings.

St. Charles Divorce Lawyers Experienced in Business Valuation

The divorce attorneys of Weiler & Associates, Inc. have extensive experience in helping business owners through the process of divorce. Contact us in our St. Charles office at 630-331-9110 to set up an initial consultation. We serve clients in Kane County including the communities of Batavia, Elgin, Geneva, Pingree Grove, and St. Charles.