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Business Valuations & Divorce

Fight for Fair Division of Business Assets

Businesses are treated like any other asset in a divorce. Because of this, it is highly important to ensure that your business is properly valuated if you are going through a divorce. Even when a business is considered to be the separate property of one spouse, any increase in the business value during the marriage could still be subject to “equitable distribution” in Colorado.

Denver Family Lawyers understands how important your business is to you. Our skilled Denver divorce attorney has over two decades of experience in all areas of family law and, as a noted trial lawyer and mediator, he is capable of protecting the interests of your business.

Call (303) 225-3343 for a Free, No-Obligation Consultation

How Do the Colorado Family Courts Approach Business Valuations?

In Colorado, there are three basic approaches to valuating businesses in divorce cases:

  • Asset-Based – The value of the business assets minus its liability. This does not include the value of any goodwill or any discount for minority interests. This is the most appropriate approach when then value of goodwill* or income is relatively small compared to the net value of assets and liabilities.
  • Income-Based – The value of income that the business is expected to produce in the future. This approach is best when future earnings and the business’s growth rate is predictable. The value is calculated based on a variety of factors, including:
    • Risk-free rate of return
    • General market risk
    • Risk rate of the industry
    • Risk associated with the business being valuated
    • The expected growth rate of the business being valuated
  • Market-Based – The value of the business based on sales of comparable businesses. This approach brings into play the “theory of substitution,” assuming that nobody would pay more for one business than they would for a similar business. This approach is most appropriate in cases where there are plenty of comparable business sales available for comparison.

*Goodwill is loosely defined in Colorado, being an intangible asset consisting of contributions made to the business that fall short of being a calculable financial interest. There are two types of goodwill: enterprise and professional (or “personal”). Enterprise is associated with the business itself, while professional/personal goodwill is associated with the owner or operator of the business.

Additional Methods of Business Valuation in Colorado

There are two less-common approaches to valuating businesses in Denver divorces:

  • Excess Earning – This combines elements of asset and income-based approaches. Essentially, the business value is divided into income by tangible assets and income by goodwill or other intangible assets. Any income above the “fair return” on tangible assets is considered “excess” and is then discounted under the appropriate capitalization rate.
  • Buy-Sell Agreements – These agreements are entered into by the existing business owners and provide for valuation of the business shares when fewer than all the owners withdraw or sell their shares in the business. Courts sometimes consider these agreements during the business valuation process.

Getting Divorced as a Business Owner in Colorado? Call (303) 225-3343 Today.

The legal professionals at Denver Family Lawyers are here to help you protect your business interests as you go through the process of divorce. Attorney William “Bill” Thode has 20 years of experience in Colorado family law and is a seasoned litigator who is most comfortable in the courtroom. No matter how complex your business situation, he is equipped to get the results you need.

Get the advocacy of a business valuation attorney. Call Denver Family Lawyers today at (303) 225-3343 or contact us online!

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Our Testimonials

Past Customers Speak Their Mind

  • “I am very pleased with Bill’s professionalism, kindness, and compassion. ”

    Nancy N.

  • “While Bill has a solid background in the courtroom, he was able to help me mediate to resolve the issues as cost effectively and peacefully as possible, despite the challenging nature of divorce cases with children involved”

    Jeff H.

  • “His knowledge of case law and personal attention to my situation are second to none.”

    Jeff S.

  • “In a world where people no longer genuinely care, I felt you cared about my case. ”

    Niel R.

  • “ I am certain Mr. Thode helped me to reclaim years of my life that this ordeal would have ultimately cost me!”

    Aubrey M.

  • “After retaining Bill my three-year very stressful battle was over in three months.”

    Tim K.

Place Your Trust in Denver Family Lawyers

Serving Colorado Families Since 1997
  1. We are led by a skilled litigator and mediator
    who is comfortable in the courtroom.
  2. We have been helping families navigate difficult
    legal situations for over 20 years.
  3. Bill is a no-nonsense Denver family law attorney
    who is focused on serving his clients' needs.
  4. All of our clients receive personalized legal strategies.
  5. We provide one-on-one attention for every family served.
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