.jpg)
When couples separate, it is not uncommon for the valuation a family business to become a fact in issue for determination at the trial. Determining the value of a business is essential to ensuring a fair settlement for both parties. In this article, we will explore the different ways that a business can be valued.
There are several ways a business can be valued. These are as follows.
This method is often used for businesses that have significant tangible assets, such as plant, and equipment. The asset-based approach involves calculating the value of the business assets, less any liabilities.
The income-based approach involves valuing the business based on its future earning potential. The income-based approach is used for a business that generates significant income from intangible assets. This method requires an analysis of the business’s financial and historical data, as well as an evaluation of its current market position and future growth potential.
The market-based approach involves valuing the business based on comparable sales of similar businesses in the same industry.
Expert witnesses are often used in family law proceedings to provide independent and objective opinions on the value of a business. These experts may be certified public accountants, business valuation professionals, or financial analysts with specialised knowledge of the industry in which the business operates.
Expert witnesses can provide testimony on the valuation methods used, assumptions made, and the resulting value of the business.
To identify the assets to be valued, the first step is to conduct a thorough review of the company’s financial statements, tax returns, and other documents related to its operations.
To determine the value of a business, several documents will be necessary. These may include financial statements, tax returns, BAS returns, shareholder agreements, operating agreements, and contracts with customers or suppliers.
It’s important to have complete and accurate information to ensure an accurate valuation.
In family law proceedings, the court will typically appoint a valuer to determine the value of a business. in other cases, the parties may agree to jointly select a valuer.
The cost of having a business valued can vary widely depending on the complexity of the business, the valuation method used, and other factors. In general, a valuation can cost anywhere from a few thousand dollars to tens of thousands of dollars depending on the complexity of the business to be valued.
It is important to seek legal advice about the business you seek to value prior to taking the requisite steps to value it. It is equally important to choose the right valuer with the right qualifications and expertise.
.jpg)
.jpg)