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What assets factor into business valuation?

| Jun 24, 2020 | Divorce |

If a divorce looms ahead and you own a business, you will likely have to determine the value of your business. You may plan on selling your business to divide the value between you and your spouse, or you might want to buy out the ownership share of your spouse. Whatever your plans, you should consider whatever assets you have that contribute to your business value. 

There are many ways to produce a business value, but according to Business News Daily, there are some factors that generally contribute to the value of any business. So if you want to get started with your business valuation, you will likely take the following factors into consideration. 

Tangible assets 

When we think of machinery and inventory, we think of tangible assets. These are the parts of your business that have a physical form. Usually, a tangible asset has a transactional value. In general, it is easy to calculate the value of tangible assets, so figuring out how much your property, equipment or material goods are worth should be one of the easiest steps to take in valuing your company. 

Intangible assets 

In contrast to tangible assets, intangible assets are assets that do not have physical forms. Intangible assets tend to consist of intellectual property, which can contribute great value to your business. Your copyrights and trademarks, for instance, would qualify as intangible assets. 

Your brand awareness would also qualify. If the buying public recognizes your products above your competitors and sees them as quality products, it means you have strong brand awareness which can add to your business value. 

Profit and income statements 

As valuable as your tangible and intangible assets may be, your business might suffer in value if you company does not generate strong profits. Expect that your financial statements will factor into your business value. These documents may include your profit and loss statements and records that detail how much revenue your business draws in. 

In addition, consider that your liabilities will also play a role in determining your business value. Massive liabilities could sink the value of your business. However, if your business does not owe a lot of money to creditors, your company will likely be in strong shape.