Naperville, IL Business and Divorce Lawyers

Experienced Business and Divorce Attorneys in DuPage County

In many relationships, a jointly-owned business may be the family's primary, or solitary, income source. During a divorce, the two most significant issues are typically professional goodwill and business valuation. The earnings must be divided as part of the property settlement; goodwill must be properly categorized as marital or non-marital property; and a market value must be established.

At Pesce Law Group, P.C., we understand that these businesses have emotional value in addition to their financial value. We take the time to listen to you and learn more about your goals and aspirations in a particular situation. Afterwards, we take prompt and sustained action to protect your legal and financial rights, both inside and outside the courtroom.

Does Business Goodwill Affect Its Value?

A business' reputation in the community, and more importantly, among its customers, may be its largest asset. To properly add value to the business for divorce valuation purposes, that goodwill must be properly classified.

• Enterprise Goodwill: Some businesses, especially franchise businesses, have goodwill that stems from the name itself. For example, most customers do not eat at a certain chain restaurant because of the owner's name. In these situations, the goodwill is considered part of the marital estate.
• Personal Goodwill: Especially in service or professional enterprises, like a law firm or a hair salon, goodwill may stem from the owner's name. For example, if the husband no longer operates Husband's Barber Shop, existing customers may leave. In these instances, the business goodwill is non-marital property.

Personal goodwill can be considered future income earning ability, so it is often a factor in a maintenance award, if not the overall property division.

How Are Businesses Valued in Illinois Divorces?

Illinois courts generally use one of three basic models to determine business value:

• Market Approach: Much like "comparables" in a real estate sale, this approach looks to the recent purchase or sale of similarly-situated businesses.
• Asset Approach: As the name implies, this method looks only at the company's fixed assets. Since it ignores cash flow and intangible assets, this approach is not appropriate in many situations.
• Income Approach: The is method is essentially the opposite of the asset approach, and the business' income over a set period of time is the determining factor in its value.

At Pesce Law Group, P.C., we work with a network of business valuators and financial professionals who can help you get an accurate estimate for what your business is worth.

Other Issues in Dividing a Business in a Divorce

Over the course of a marriage, a business may become commingled. In other words, a separately owned business can end up classified as marital property, which sometimes occurs when the other spouse makes significant contributions to the business. To avoid this exact situation, many couples opt to draft a prenuptial agreement so that the business does not end up subject to division.

If the parties jointly own the business, as is often the case, the court will determine whether the now ex-spouses can continue to operate it, or whether the business should be sold. The law regarding business valuation is constantly evolving, so your attorney should be fully informed of the latest developments. Our lawyers can advise you of what to do when your business or business interests are at stake in your divorce.

Reach Out to a Naperville, Illinois Business Divorce Lawyer Today

At Pesce Law Group, P.C., our professionals regularly attend seminars and other continuing education events. Contact us today at 630-352-2240 for a free consultation with our DuPage County, IL business valuation and division lawyers. We serve families in and around DuPage County.