Preserving Families

And Protecting Assets

mother and two kids walking at sunset

How is a Texas business evaluated during a divorce?

Texas business owners who started their own companies from the ground up understand what a rewarding yet stressful process it can be. After working for years to establish a profitable business, the last thing a business owner wants is to lose out in property division proceedings in a divorce. Because each state has its own property division guidelines, it is helpful to research business valuation laws in the state you live in before heading to court.

Texas is a community property state, which means that most family court judges will split marital assets 50/50 between two spouses in a divorce. However, in order to determine how much a business is worth, there must first be a business valuation, which, in this state, takes place when a licensed business appraiser determines the current fair market value of a business. It is critical for a concerned spouse to understand what is meant by “fair market value.”

How much would a buyer be willing to pay?

The “fair market value of a business” refers to the price an average buyer might be willing to pay if he or she were to purchase the business at this time. If buyers on the open market were fully aware of all pertinent information, such as a business’s assets, inventory, liabilities, etc., how much would they be willing to spend to purchase the business? Some business-owning spouses in the past have tried to prevent a true valuation of a business from occurring by hiding assets, which is a form of perjury in a divorce.

Know where to seek support for business valuation issues in a Texas divorce

A Texas business owner preparing for divorce can make informed decisions by enlisting support from various networks as needed. From financial advisors to an experienced legal team, such support can help alleviate stress during property division proceedings. It can also help a spouse make sure that he or she is getting a fair settlement.