Do you know how to determine the value of your business?
Your divorce has a unique aspect at play: You and your soon-to-be-ex-spouse operated a Texas-based business together, one that you now have to decide how to divide during your divorce. You do not know what you want to do with the business, but you do need to know the value of it.
Inc. can help you get started with the valuation process. Learn a few common ways to value your business so you know its current worth.
Take a look at recent sales of businesses similar to yours in terms of industry, size, geographic location and features. Seek out online resources that offer recent prices, cash flows and revenues of businesses similar to yours. Speaking with a business broker is also a good idea to find such information.
The way price multiples work is you use your company’s cash flow and revenue. For cash flow, add your business earnings before interest, depreciation, taxes and amortization with the seller’s discretionary earnings. After that, use a multiplier such as an average sales price or cash flow. Explore current multiple data for the most current numbers.
Formal valuations and appraisals
You and your soon-to-be-ex-spouse may rather have an experienced business appraiser valuate your business. You may prefer this option if the two of you decide to sell the business and split the profits. More importantly, leaving the job to a valuator can eliminate any doubt as to whether you have the most accurate value of your business.
This information is only intended to educate and should not be interpreted as legal advice.