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Asset Appraisals  &
Business Valuations

One of the more challenging aspects of unwinding and unraveling the financial affairs of affluent divorcing couples is identifying, tracking, assessing and appraisng or establishing a fair market valuation of the couples' assets and financial holdings. In addition to inventorying and assessing the assets whether investiments, business ownership or investment, art, jewelry, vehicles, aircraft, boats or investment property is the determination of the source of the funds, whether marital or pre-marital and if tranches were invested at various times how this unwinds to produce a capitalization tables representing individual ownership. Imagine all of this in the context of how a pre-or post-nuptial agreement needs to be applied! The mix is complex and requires seasoned, experienced professionals to ensure that fairness and equity are maintained for both parties.

As complex as this can be at times we are prepared with financial and tax accountants, attorneys and business valuation professionals to accomplish these tasks to produce a fair and equitable statement of assets. We are here to provide the assistance in every category to ensure fairness to both parties.

ASSET APPRAISALS

Many high net worth divorces are between couples who have not only high income but also substantial assets in a variety of holdings acquired over a number of years which, in may have different cost bases, were acquired by one spouse or the other but with 'joint' funds or may even have been brought into the marriage through a trust or as a premarital asset. Many times there is no prenuptial agreement to guide the division of these assets so a proper and fair accounting is needed to determine not only the value of the asset but the cost basis as well. This may involve some forensic accounting to unravel the detail and history of the asset as well as unique knowledge and skill in assessing the value as in the case of some of the items listed below:

  • investments in stocks, bonds, warrants and other commercial paper

  • artwork, including paintings, sculpture, rugs and tapestries

  • exotic or classic car collection

  • one or more aircraft and yachts - if not personal, may be valued as part of a business enterprise or fractional ownership

  • other residential property investments or commercial real estate 

  • one or more businesses that are owned in whole or in part

The Geni Manning Real Estate Group has professional associates that have specialty capability to perform the necessary evaluation, valuation and appraisal of these and other high net worth or business assets. Also, our partners in business brokerage as well as financial and tax accounting are experienced at unraveling pre-marital property, gifts and marital property to ensure an accurate representation of the net worth of each spouse.

BUSINESS VALUATIONS

Businesses in Texas are much like any other property and are typically determined to be community property if they were acquired during a marriage. In some cases, parties may have executed prenuptial or postnuptial agreements that clearly define each spouses’ interest in a business; however, in the majority of cases no such agreement exists as the business was obtained during the marriage.

 

Additionally, portions of the value of any business obtained by one spouse prior to the marriage may be community property or may create a claim for reimbursement to the community estate, such as if the non-owner spouse helped to increase the value of the business or if marital assets were used to fund the business. If some or all of a business is deemed community property it is important that the business’s value is properly assessed, so that any community property may be divided in a fair manner.

OVERVIEW OF BUSINESS VALUATION

Most businesses have a fair market value and a book value, and the two values may be drastically different. The fair market value is what a buyer would pay for the business, if the buyer wanted to purchase the business but was not required to, and the owner wanted to sell the business but did not need to. The fair market value considers intangible elements such as the value provided to a business due to goodwill.

 

Conversely, the book value of a company is theoretically the amount of money that would be paid to owners if the company was liquidated and paid off all of its liabilities. As a result, the book value equals the difference between a company's total assets and total liabilities. In other words, the book value is literally the value of the company according to its books (balance sheet) once all liabilities are subtracted from assets. 

EVERY BUSINESS IS DIFFERENT!

THERE IS NO ONE SIZE FITS ALL

There are several accepted methods that may be used to assess the value of a business. Identifying the most appropriate method depends on the nature of the business, business structure (i.e., LLC vs S-Corp vs C-Corp) which will govern the type of ownership interest and whether the business has investors / shareholders. The ability to accurately determine the value of the business will also depend upon whether it is private or public, i.e. listed on an exchange such as the OTC (Over-The-Counter), AMEX, NASDAQ, NYSE or a foreign exchange. The valuation of public traded companies is largely set by the market and fluctuates on a daily basis driven by a number of independent factors.

Generally, the value of a business can be determined by one of the following:

  • an income-based approach determines how much income the business is likely to generate in the future. There are several different methods used to determine this potential future income.

  • an asset-based approach or adjusted book value is a common asset-based calculation that is frequently used. The adjusted book value is calculated by determining the market value of a business’s tangible assets, then subtracting any liabilities.

  • a market-based approach looks at sales of comparable businesses to determine the fair-market value. In some cases, such as when a business is unique and there are no similar businesses being sold, it may be difficult to apply the comparable business method.

The Geni Manning Real Estate Group has a number of well-respected business valuation experts to accurately appraise a business valuation in a divorce.

YOU'VE BUILT YOUR BUSINESS! 

NOW LET US HELP YOU PROTECT IT!

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