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Mistakes to avoid during business valuations for your divorce

by | Apr 29, 2021 | Divorce |

Asset division mistakes during a divorce can cause you to lose far more than you would otherwise. When your business is also involved in the property division, getting a fair and accurate appraisal of the company is essential but it isn’t always easy. Here are three mistakes you should avoid during the appraisal process to ensure you get an appraisal you can trust:

Ignoring risks during growth projections

Part of the valuation of your business comes from growth projections. A business that is presently doing well will likely have high projections that increase the appraisal value. The issue with this is that it may not take into account risks that could impede future growth. Be sure to consider these risks to keep from overvaluing your business.

Improper valuations

There are three typical valuation methods for appraising a business: market value, income-based, and asset-based. Each of these options can yield a widely different appraisal value for your company, which is why you need to be sure you are using the right method. For example, if your business is a private company, a market value approach that compares it to publicly available companies likely will not result in the most accurate valuation.

Not acknowledging liabilities

If you use an asset-based valuation, including all company assets is a given, but you need to include your business’ liabilities as well. Take the proverbial fine-toothed comb through your business to account for all assets and liabilities during the valuation. Failing to do this could mean that you find yourself negotiating over a business that is not worth what you think it is.

Get the appraisal you deserve

If you are looking for a business valuation that you can trust, one that will help you secure the best possible outcome in your divorce, contact an experienced family law attorney. Trustworthy divorce lawyers know how to help you get the appraisal you need while avoiding critical mistakes that could derail the asset division process.