When a business is part of a divorce, someone has to decide what it’s worth. How a business is valued can change the outcome of the entire property division.

Why the Business Must Be Valued

In Arkansas, marital property is divided equally unless the court finds that unfair and explains why (A.C.A. § 9-12-315). So if a business is marital property, its value usually needs to be known before it can be divided fairly.

Common Ways a Business Is Valued

Asset approach. This looks at what the business owns minus what it owes.
Income approach. This estimates value based on the income the business is expected to produce.
Market approach. This compares the business with similar businesses that have sold.

Often, a valuation expert uses more than one approach.

Goodwill

Goodwill is the value of a business’s reputation and customer relationships. Courts often distinguish between goodwill that belongs to the business itself and goodwill tied to the owner personally. That distinction can matter a great deal, especially for professional practices.

Records You Will Need

Several years of tax returns and financial statements
Bank statements and payroll records
Ownership and partnership agreements
Records of business debts and assets

Competing Experts

Each spouse may hire a different expert, and their numbers may not match. In that case, the court decides which valuation is more convincing.

For more, read whether your spouse will receive half your business or see my divorce page.

Talk With a Jonesboro Lawyer

You can call the office at 870.525.2191. Our phones are answered 24 hours a day, and Sara Beth or I will call you back. You can also request a consultation online. Consultations are free and usually last about 30 minutes, and I’ll explain how fees work for your kind of case before you decide anything.

This post is general information about Arkansas law, not legal advice for your situation.