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Estimating the value of a small business

Many couples in Rockford, Illinois, are involved in a family business. Whether they are the co-founders and sole stakeholders or a part of a larger operation that includes other family members or even those outside the family, these businesses present wonderful opportunities for married couples both in terms of providing a livelihood and growing one's wealth.

However, there are some circumstances in life that mean the couple, or someone, will have to part with all or some of their business. This is true in the event of a high asset divorce, in which the couple will divide their business between each other or one of the spouses will cash out. However, it is also true in other situations, like when there are financial problems or if one of the spouses dies unexpectedly. Unmarried couples who own a business together may also face business valuation issues.

In these events, one will have to put a value on the family business, which can be hard since, unlike large, publically traded companies, one cannot just check the price of a share of stock in the business. Short of selling the business, the best way to get an accurate value on the business is to hire an accountant, a business evaluator or some other expert in the field who can give an informed opinion that, ideally, every one can agree on.

Still, there are many different techniques, all with a slightly different emphasis, that allow a person to estimate how much his or her business is worth. Most obviously, a person is going to want to have some idea of what assets the business owns, which can include a building or buildings, vehicles and business equipment, as well as accounts receivable.

Then, a person also has to ask how much income they think the business will provide him or her over the long term. When a person buys a business, after all, what they are really buying is the right to receive a certain amount of income over the course of the life of the business.

Still, Illinois couples who have business valuation questions in a legal context will probably want to speak with a family law attorney.

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