Nashville View

Business Valuation

Family Law Attorneys Protecting the Rights of Nashville Residents

The equal distribution of property between divorcing spouses seems like a process that might be relatively easy compared to some issues. However, if their assets include a closely held business, valuing its worth and arranging subsequent distribution may become complicated. The family law lawyers at Martin Heller Potempa & Sheppard PLLC can represent Nashville business owners or their spouses. We provide complex financial analysis and business valuation services. As one of the most technologically advanced firms in Tennessee, we utilize an array of strategies to try to ensure your entity’s value is properly determined

Guidelines for Business Valuation in Tennessee

Business valuation involves many factors and may be a complex, stress-inducing process, especially when parties going through a divorce are awaiting the outcome in order to plan for their futures. Different kinds of businesses require different strategies for determining their values. Sole proprietorships, partnerships, private professional practices, and corporations all may need certain types of evaluations to establish their proper worth. The Internal Revenue Service establishes business value estimates based on the price it would sell at, given a willing buyer and seller for the fair market value. The IRS uses the following factors in valuing a closely held business:

  • The business’ history,
  • Current economic outlook,
  • The business’ earning capacity,
  • The business’ book value, and
  • Goodwill.

Measuring the value of goodwill of a business can become difficult, especially when the business is of a personal professional nature. For instance, in a small accounting firm where one spouse is the principal and the other holds a more managerial role, the company’s professional goodwill is most likely linked to personal goodwill towards the principal. Thus, some courts have found that goodwill does not qualify as a marital asset that is divided during the dissolution of a marriage.

A business’ debt is also important when valuing a company. When a spouse uses marital assets as security for a debt in a business, the other spouse must be cautious in determining the debt’s value and protecting him or herself against liability. Another issue that arises in business valuation situations is that of double counting of a marital asset, both during division of property and also when determining a spousal support award. Double dipping occurs when identical income is calculated twice to work against a business-owning spouse. The issues surrounding business valuation require a detailed examination of all the factors involved so that calculations and the method are fair. Consulting an experienced attorney is important in making sure marital dissolution agreements are comprehensive and reasonable for both parties.

Legal Representation for Individuals in the Nashville Area Seeking a Divorce

The divorce attorneys at Martin Heller Potempa & Sheppard PLLC have experience helping Nashville residents and other individuals throughout Tennessee deal with complex divorce cases involving business valuation as well as other issues. We can help you try to make sure your family company’s worth is calculated properly and that the distribution of marital assets is equitable and fair. Our firm represents clients throughout Davidson and Williamson Counties, including in Franklin, Sylvan Park, East Nashville, and Brentwood. Feel free to contact us online or call 615-800-7096 to see how we can help.