Divorce and Business Valuation: What You Need to Know

Divorce is one of life’s most challenging transitions—and when a business is involved, the process becomes even more complex. For many business owners, their company is not only their livelihood but also one of their most valuable assets. Understanding business valuation in divorce cases is critical for ensuring a fair outcome and protecting your financial future.

Why Business Valuation Matters in Divorce

In divorce proceedings, marital property is divided between spouses. If one or both spouses own a business, its value must be determined as part of the property settlement. A reliable business appraisal ensures transparency, reduces disputes, and helps both parties make informed decisions.

Common reasons a business valuation is required in divorce include:

• Determining the value of marital assets

• Supporting negotiations and settlements

• Providing evidence in court if disputes arise

Methods Used to Value a Business in Divorce

A qualified appraiser will use established approaches to determine what your business is worth, including:

1. Income Approach – Evaluates the company based on future earnings, often using EBITDA or Seller’s Discretionary Earnings (SDE).

2. Market Approach – Compares your business to similar companies that have recently sold.

3. Asset Approach – Assesses the value of business assets minus liabilities.

The choice of method often depends on the type of business, industry, and available financial data.

Key Considerations in Divorce Business Valuations

• Marital vs. Separate Property: Not all business value may be considered marital property, depending on when the business was started and how it was funded.

• Active vs. Passive Appreciation: Courts may distinguish between value created through a spouse’s direct efforts (active) and value gained from outside market forces (passive).

• Goodwill: Some states include business goodwill (reputation, brand, customer loyalty) in valuations, while others exclude it.

The Importance of a Qualified Business Appraiser

A divorce case requires an experienced business valuation expert who understands both financial and legal complexities. A Certified Business Appraiser (CBA) or Certified Valuation Analyst (CVA) provides credibility in court and ensures the valuation withstands scrutiny.

At Business Valuation Solutions, we specialize in small business valuations for divorce, partnership disputes, exit planning, and more. We provide defensible valuations to help you achieve a fair settlement.

Protecting Your Interests During Divorce

Whether you’re the business owner or the spouse of one, getting a professional valuation helps protect your financial interests. With clear, unbiased data, you can negotiate from a position of strength and avoid unnecessary conflict.