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Business valuation critical prior to divorce settlement

The owners of private companies in Texas generally need to disclose their business assets when negotiating divorce settlements. Because the business likely represents a significant asset, its value could play a large role in the division of the marital estate. The ex-spouse who owns the business may need to provide a cash settlement to the other party based on the business's value. The valuation could also influence the calculation of child or spousal support.

To arrive at an accurate figure, the divorcing parties will need to hire a business valuation professional. This professional will select one of the three systems for measuring a business's value, which are the asset, market or income method. The valuator will examine the company's financial records, tour facilities and interview management.

A business owner who had their enterprise prior to marriage might only need to calculate the appreciation in value since the date of marriage. In that case, the business valuation analyst would need to determine the business's value at the time of marriage and divorce and subtract the difference.

The services of an independent valuation professional could uncover attempts by the owner to hide assets or inflate expenses. Any variations identified by the consultant would be entered as adjustments on the financial disclosures for the divorce proceedings.

Legal counsel typically supports a person going through a high-asset divorce. An attorney could monitor the valuation process and suggest compromises as the client attempts to reach a settlement deal with the former partner. If demands from the other party threaten the person's rights to property or access to children, then the attorney could petition the court to intervene. During litigation, an attorney could present information that promotes the client's best interests.

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