Home Chester County Business Valuation in a Divorce

Lawyer for Business Valuation in a Chester County Divorce

How Divorce Can Threaten a Family Business

Starting a family business is a heartfelt experience, one that involves a lot of time, sweat, and tears. While business owners plan for many scenarios – property damage, bad economy, new competition – divorce is one that most do not anticipate. In Pennsylvania, businesses can be considered marital property and be subject to property division during a divorce.

If you are going through a divorce in Chester County and are worried about how property division will impact your business, reach out to the Law Offices of Sheryl R. Rentz, P.C. With over 25 years of experience handling complex divorces for clients, our Chester County divorce lawyer can review your situation, listen to your concerns, and work to determine the value of your business. To speak to our lead attorney in a free consultation, call us toll-free at (866) 290-9292.

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Are Businesses Subject to Property Division?

Whether a business is considered marital property will depend on when it was founded. Any property or assets acquired prior to marriage, including businesses, are considered separate property under Pennsylvania’s divorce laws and belong to only one spouse. If you started a business prior to getting married and your spouse was not involved in its founding, then it would be considered separate property.

However, if the business was started after the marriage, whether both spouses were involved or not, then it is considered marital property and is subject to property division. Any income from the business could be considered marital income and impact your household. For business owners, this means that they may need to pay a settlement or divide a business according to state laws. For spouses, dividing a business could determine the value of spousal support or alimony, especially if the business was the primary source of income for the household.

Chester County divorce courts divide marital property based on what is considered “fair” for both sides. The family business will need to be assigned a certain value for the court to divide it during a divorce. This value can vary between businesses and include:

  • Real estate
  • Debt, include business credit cards and loans
  • Equipment
  • Licenses and certifications
  • Trademarks and copyright
  • Stock options
  • Personal income from the business
  • Liabilities

Every situation is different, and there are different solutions to help determine a business’s value and how it should be divided.

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Your Options During a PA Divorce

By working with an experienced divorce lawyer, you may be able to come to an amicable solution with your spouse regarding a family business. That will require an in-depth look at a business’s finances and assets to determine how it is valued, what share each spouse may have in it, and what options you have.

These options can include:

Asset-Approach: With an asset-approach, we will add up all of the tangible and intangible assets a business may hold, including physical property, equipment, and licenses, in addition to the business’s debts. Altogether, this approach will create a financial value for a business that can then be divided during a divorce to determine what is fair for both sides.

Market-Approach: It is possible to determine a relative value of a business based on the value of similar businesses in Chester County. For example, if you or your spouse runs a clinic, you could compare the success of other clinics in the county to the business. This is less accurate than an asset-approach, but it may help show how well your business may perform in the future.

Income-Approach: An income-approach looks at the financial potential of your business, including how profitable it has been in the past and how it will grow in the future. Unlike an asset- or market-approach, this method can show a potential loss if business has been slow or you anticipate a downturn.

This is not an exhaustive list, and there are other ways to calculate a business’s value. To decide which one is appropriate for your situation, you need to speak to a knowledgeable Chester County attorney who can explain your options.

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Why You Should Talk to a Lawyer About Your Divorce

The value of a business can impact both sides of a divorce. Business owners will want to protect their assets in order to keep their business running and successful. In turn, spouses who have a smaller role in the company or rely on it for a household income could be left destitute after a divorce. Pennsylvania courts seek equitable solutions for most divorces, but you still should have strong legal representation to ensure your rights are protected.

At the Law Offices of Sheryl R. Rentz, P.C., our Chester County family law attorney can provide the in-depth legal guidance you need during this difficult part of your life. We can sit down with you in a free consultation and explain all of your options for valuing a business. We have served clients throughout Chester County for more than 25 years and thoroughly understand Pennsylvania’s divorce laws. To get started on your case, call our office toll-free at (866) 290-9292.

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