Business and High-Asset Divorce

Protecting An Investment

Asset division in a high-asset divorce can be frightening, especially to a business owner. Figuring out how your hard work and time investment will be factored into property division can be a headache and cause one to become riddled with anxiety. For those who own a business and are getting a divorce, here are some things to consider.

Type of Property

One factor that can play into what happens with your business in a divorce is what type of property your business is. If you owned the business prior to marriage or if the funds used to purchase the business were acquired prior to the marriage, then your business may qualify as separate property, which does not get divided in Texas property distribution.

If, on the other hand, you purchased the business or started it while you were married or if your spouse has significant contributions to the business, then it may be considered community property, which is divided in divorce.

Business Valuation

An essential step in preparing a business for a divorce is accurate valuation. This can be a source of disagreement in a divorce, so it is important to work with a team of experts that can assess your business and determine an accurate value. Asset valuation can typically be done in three ways:

Asset-based valuation, perhaps the simplest method of valuation, adds up the total values of each asset that is part of the business. Debts and liabilities are subtracted from this number to come to the final value.
Income-based valuation examines cash flow and projects that number to the future to determine the profitability of the business.
Market valuation takes local business sales into consideration and uses that information to determine the value of the business.

It is important to work with experts who can inform you how you should best proceed with business valuation.

Determining What Happens

If your business is community property, then you have options to help you determine what will happen to the business after the divorce. One option is to buy out the other spouse’s share in the business with cash or other assets that are up for distribution. You can also sell the business to your spouse or remain co-owners of the business (should the two of you have a good enough relationship to do so). In any case, you should consult with your attorney and have them work through the negotiations to determine what should happen.

Work With Your Texas Attorney

In all of these steps, you should keep your attorney at the forefront of the procedure in order to better protect the business that you have built. At Law Office of Mark M. Childress, we understand how important your business is to you, which is why we are committed to doing everything possible to help you preserve what is yours.

To schedule a consultation, call us at (817) 497-8148 or visit us online.