The Top 4 things Business Owners should do when Separating

3. Invest in the Right Business Valuer

It is often difficult to understand the true value of a business. Whilst the annual Financial Statements may assist in setting out the value of the tangible assets and liabilities as at the end of financial year, it does not capture intangible assets, such as good will and intellectual property. It is these intangible assets that are usually harder to value because their worth is subjective and discretionary.

Why Business Valuation Matters in a Divorce

Though a difficult process, it is important that the market value of the business is established because it will form an asset within the pool of property.

Ordinarily, parties will obtain a valuation report from an independent business valuer. This valuer will put a price on the business and that price is used as the asset value.

It is important that the right valuer is appointed to conduct this exercise. It may be the case that there are changes in the market or to your customer base, which mean you anticipate a downturn in your business revenue or profit. This will significantly impact the value of your business. It is important that the valuer appointed to prepare the valuation report understands these aspects and is familiar with your business area and the market trends.

4. Consider your Future Income and Cash Flow

Cash flow is an important aspect when going through a separation, especially if your income was derived from a jointly owned business. Your income will have an impact on any child support or spousal maintenance that you ought to pay. Income can include bonuses, commission, rental income, dividends and distributions.

It is important that you engage a solicitor experienced in property division where a business is involved at the earliest opportunity so that you can ensure you obtain the relevant strategic advice to secure your best future post separation.