When a business is involved in a divorce, the financial stakes are high. For business owners, the company is often their most valuable asset—and how it's valued can dramatically impact the final settlement.

Unfortunately, many business owners and attorneys make critical mistakes during the valuation process that lead to lost value, drawn-out disputes, and unfavorable outcomes.

At Strong Tower Valuations, we’ve worked with business owners, attorneys, and courts through all phases of the divorce valuation process. In this article, we’ll explore the most common mistakes we see—and how you can avoid them to protect your financial interests and reach a fair result.

Mistake #1: Using a Rule-of-Thumb Valuation

It’s common to hear statements like “Most businesses are worth 2x revenue” or “Just take the net income and multiply it by 3.” While rules of thumb might sound convenient, they’re not reliable for legal purposes—especially in divorce.

Every business is different. Industry, risk, profitability, owner dependence, and marketability all affect value. Courts expect valuations that reflect actual performance and accepted valuation methods, not rough estimates.

The risk: Settling based on an informal multiple could mean overpaying or undervaluing your business—neither of which is acceptable in a legal setting.

Request a Consultation to ensure your business valuation is based on facts, not assumptions.

Mistake #2: Failing to Normalize the Financials

Most small business financial statements include personal expenses, owner perks, or one-time transactions that distort the true economic performance of the business. If these items aren’t adjusted or normalized, the resulting valuation could be way off.

Common normalization items include:

• Owner salary above or below market rate
• Personal vehicles, insurance, or travel
• Non-recurring legal or consulting expenses
• PPP loans or temporary subsidies

The risk: Inaccurate financials can significantly inflate or depress business value, leading to unjust asset division.

Mistake #3: Choosing a Biased or Unqualified Valuator

Valuation is part art, part science. A biased or underqualified valuator can easily sway the result—and that creates credibility issues in court.

Courts prefer valuations that are:

• Prepared by credentialed professionals (e.g., CVA, ABV, ASA)
• Objective and independent
• Documented with clear logic and methodology
• Compliant with valuation standards (such as NACVA or AICPA)

Engaging someone without proper credentials or litigation experience can lead to a report that is rejected, challenged, or ignored in court.

Request a Consultation with a credentialed valuation professional trusted by attorneys and courts alike.

Mistake #4: Overlooking Owner Dependence

Many small businesses are built around the owner—and can’t function without them. If you're the face of the company, the top salesperson, and the day-to-day operator, the business’s value may be lower than you think due to lack of transferability.

What courts want to know: Could this business continue operating successfully without you? If the answer is no, a discount may apply to reflect risk to a hypothetical buyer.

The risk: Failing to address or document owner dependence may lead to unrealistic valuation expectations and disputes during settlement.

Mistake #5: Ignoring Discounts for Lack of Marketability or Control

In some cases, the business interest being valued is a minority stake or a non-controlling interest. If that’s the case, discounts for lack of control (DLOC) and lack of marketability (DLOM) may apply.

Courts vary in their treatment of these discounts, but failing to properly analyze and document them can lead to inflated valuations and legal challenges.

The risk: Not applying appropriate discounts—or applying them incorrectly—can result in unfair distributions and may invite rebuttals from the opposing party’s expert.

Mistake #6: Waiting Too Long to Start the Valuation Process

Business valuations take time. If you wait until the last minute, you may be forced into rushed decisions, incomplete documentation, or weak expert preparation.

Start early to:

• Give your valuation expert time to request and review documentation
• Provide context about ownership, management, and finances
• Allow for rebuttal or response if the opposing party provides their own valuation

The risk: Delaying the valuation process can reduce leverage in negotiations and create unnecessary stress during a critical phase of your divorce.

How to Avoid These Mistakes

Here’s how business owners and attorneys can protect themselves:

• Hire a certified valuation expert with divorce experience
• Work with your CPA or bookkeeper to gather complete, accurate financial records
• Be transparent—attempting to hide or manipulate numbers will likely backfire
• Discuss valuation early in the divorce process—not at the last minute

Why Strong Tower Valuations Is a Trusted Divorce Partner

We specialize in delivering independent, court-ready business valuations for divorce cases. Our team has extensive experience working with attorneys, clients, and the courts to ensure valuations are accurate, well-documented, and legally defensible.

We bring:

• Certified professionals (CVA, CPA/ABV)
• Years of divorce valuation experience
• Clear, understandable reports that hold up in court
• Expert witness testimony and litigation support when needed

Request a Consultation to protect your interests with a valuation team that understands divorce dynamics.

Final Thoughts

Dividing a business during divorce is complex—but avoidable mistakes don’t have to make it harder. The right valuation partner can help reduce conflict, protect your financial future, and support a fair, transparent outcome.

Strong Tower Valuations is here to guide you through the process with objectivity, professionalism, and clarity.

Request a Consultation and avoid the valuation pitfalls that cost business owners time, money, and peace of mind.