Valuation of Businesses

Businesses are appraised by specialized exerts. The parties can either agree on an expert or each can hire their own.

What a spouse is entitled to regarding a business depends on a number of factors, including whether it is a marital asset and what if anything the spouse did to contribute to its value. If the business is separate property, the issue will revolve around whether the business has appreciated in value since the marriage.

There are three methods for determining value of a business, which are the asset approach, the income approach and the market approach.

The asset approach values a business based upon the total of its assets and liabilities. This is generally done for real estate companies. The income approach determines the value of the business based upon its operating income after liabilities are taken into consideration. The market approach determines value based on what the fair market value of the business would be if sold on the open market.