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Property division: How can I put a value on our family business?

One of the hardest pieces of property to put a precise value on is a family or other closely-held business.

Unlike other valuable items, like a bank account or even shares of stock, one cannot just go to a reliable source and look up the dollar value of a family business. So, although it is counterintuitive since most Arizona businesses are closely held by spouses, family members and close friends, it is actually harder to get an idea of how much one's interest in a family business is worth than it is to put a value on one's interest in a multinational corporation

Likewise, because businesses are all unique commodities, there are relatively few accepted resources, like Zillow for houses or Kelley Blue Book for cars, that a Phoenix resident can turn to for an estimate of a business's value.

The reason this is important is that in a number of legal contexts, a family will need to value its business. For instance, during a divorce or, for that matter, even when a partnership is ending between an unmarried couple, a court will have to engage in asset valuation and division of the business, and each person involved will have to pitch what they think the business is worth.

Aside from just selling it, the most reliable way to get a value on a business is to hire a business evaluator or other expert to give a reliable opinion. There are also ways a person can come to reasonable estimate of a business's value.

While some of these means may involve doing some market research one's self, others are as simple as applying a formula to a business's cash flows, that is, information that should be readily available in the business's accounting records. In the end, though, if a person needs to ascertain the value of a business for divorce purposes, it may help to work with an attorney, who can advise their client on how to accomplish this task.

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