How Business Valuation Works in Divorce: What Owners and Attorneys Need to Know

Divorce is difficult enough—emotionally, legally, and financially. But when a business is involved, the complexity increases significantly. Whether one spouse owns a company or both are involved, accurately valuing the business is a critical step in achieving a fair and equitable division of marital assets.

At Strong Tower Valuations, we help attorneys and business owners navigate the business valuation process during divorce proceedings. Our role is to deliver a clear, independent, and defensible conclusion of value that stands up to scrutiny and supports informed decision-making.

In this article, we’ll walk through how business valuation works in divorce, what makes it different from other valuation contexts, and what both attorneys and business owners need to keep in mind to protect their interests.

Why Business Valuation Is So Important in Divorce

When one or both spouses own a business, the value of that business often becomes one of the largest marital assets. And unlike a house or retirement account, the value of a business isn’t listed on a statement—it has to be determined through analysis and professional judgment.

A formal valuation helps answer essential questions:

• Is the business a marital asset, separate property, or a combination of both?
• What is the fair market value of the business?
• How should that value be allocated in the divorce settlement?

Without an objective valuation, negotiations can quickly become emotional, contentious, or misinformed. And in court, the absence of a professional valuation can undermine the credibility of one side’s claims.

Request a Consultation to secure an independent business valuation for your divorce case.

Marital vs. Separate Business Interests

The first step in any valuation for divorce is determining the nature of the ownership interest. Generally, businesses acquired or started during the marriage are considered marital assets and subject to division. However, even a business started before the marriage can have a marital component if it grew in value during the marriage or was supported by marital resources.

Our valuation process accounts for this by:

• Reviewing the business history and formation documents
• Analyzing financial trends during the marriage
• Understanding each spouse’s involvement, contributions, and compensation

This distinction is critical, especially in states that follow equitable distribution rules, where only marital assets are subject to division.

Understanding Fair Market Value in Divorce

In most divorce-related valuations, the standard used is fair market value: what a willing buyer would pay a willing seller in an arm’s-length transaction, with both having reasonable knowledge of the relevant facts and neither being under compulsion to act.

This means the valuation must reflect:

• The company’s financial performance
• Industry trends and risk factors
• Asset base and liabilities
• Transferability of the business and owner dependence

In some jurisdictions, the court may also consider “investment value” or allow discounts for lack of marketability or control. These issues must be handled carefully and documented clearly to withstand legal challenges.

Request a Consultation to ensure your business valuation is court-ready and properly documented.

Key Components of a Divorce Business Valuation

Our process at Strong Tower Valuations includes:

1. Financial Normalization

We adjust the company’s financial statements to reflect true economic performance. This includes removing personal expenses, one-time items, and excess compensation that may distort earnings.

2. Selection of Valuation Approach

Depending on the nature of the business, we apply one or more accepted valuation methods:

• Income Approach – Based on the company’s ability to generate future cash flows
• Market Approach – Based on comparable company sales and industry benchmarks
• Asset-Based Approach – Based on the value of tangible and intangible assets

3. Documentation and Expert Support

We produce a detailed, defensible report suitable for use in negotiations, mediation, or court. When necessary, we also provide expert testimony and litigation support to explain and defend our findings.

Common Mistakes to Avoid

Business owners and attorneys should be aware of these common pitfalls in divorce valuations:

• Relying on informal estimates – Courts need professionally prepared reports, not back-of-the-napkin math
• Failing to disclose all relevant financial information – Incomplete records can harm credibility and delay proceedings
• Ignoring owner add-backs – Personal expenses or benefits that reduce reported profits can skew results if not properly adjusted
• Using a biased or unqualified expert – The opposing side will challenge any valuation that lacks credentials or objectivity

Why Work with Strong Tower Valuations

Our team brings deep experience in divorce-related valuations, with a focus on clarity, independence, and professionalism. We work closely with legal teams to meet court deadlines, support equitable settlements, and protect our clients’ financial interests.

We hold respected credentials such as CPA/ABV and CVA, and our reports follow industry standards including those set by NACVA, AICPA, and ASA.

Request a Consultation today to work with a valuation partner who understands the legal, financial, and emotional dynamics of divorce.

Business Valuations for Divorce

Business valuation in divorce is not just about numbers—it’s about fairness, clarity, and resolution. Whether you're an attorney advocating for your client or a business owner facing a challenging transition, having a trusted valuation expert on your side can make all the difference.

At Strong Tower Valuations, we provide objective, defensible valuations that help clients move forward with confidence—even in difficult times.

Request a Consultation to discuss your case with our team today.