Some Florida couples decide to go into business together. However, if the couple decides to end their marriage, what will become of their business is an important question. It is very likely that the business will have to be valuated to determine its worth. In the event the business is sold, a fair market price will be required so that each spouse receives a proper share.
According to Chron.com, businesses are valuated in different ways. A company that is publicly traded can be valuated by the price of its stock. However, this does not always produce accurate results since stock prices fluctuate. Also, stocks may not reflect the true value of the assets owned by the company. Many small businesses are not publicly traded, so stock valuation will not apply to many businesses in Florida.
Other than valuating by stock price, there are a number of ways to valuate a business. You might compare your company to a similar one within the same geographic area. You could valuate the assets owned by your business. Some business owners assess the value of their operation using the Discounted Cash Flow (DCF) method. A less widely used valuation method is to estimate how much it would cost to start up a business like your own from scratch.
All of these methods have their positives and negatives. You might try to compare your company to a similar one, only to find a similar company is not available in your area. Valuing your company by Discounted Cash Flow may be thrown off if you assume overly optimistic cash flow projections. Appraising the value of your company assets may not capture the full scope of the worth of your company since other factors, like the goodwill of your company, can increase its value.
Because there are many ways to valuate a business, you might need to consult with a financial professional to understand the best way to put a price on your enterprise. Because business valuation can be a complicated matter, do not read this article as legal counsel for your situation. It is only intended for educational benefit.