When you or your spouse owns a business, divorce quickly becomes about more than just splitting assets – it becomes about defining what those assets are actually worth. And unlike bank accounts or cars, a business is not easy to divide. You can’t negotiate what you don’t fully understand, and when the value is up for debate, so is everything else.
How valuation fits into equitable distribution
In most states, the law doesn’t assume a straight 50/50 split. Instead, courts aim for something more flexible: equitable distribution. That means property gets divided fairly, not necessarily equally – and before anything gets divided, the court needs to know what counts as marital property and how much that property is worth.
If the business grew during the marriage, even if it started out as separate, the increase in value might be on the table. Your role – whether direct or indirect – could give you a rightful claim to part of it, and that’s where the numbers come in.
Valuation methods can shift the outcome
There’s no single formula for valuing a business. One expert might project future profits; another might tally up equipment and inventory; a third might pull comparisons from recent business sales. Each approach can lead to a different result – and that number drives everything from negotiations to buyouts.
If you don’t look closely at how the valuation was calculated, you might end up agreeing to a number that’s inflated or unrealistic, and that could leave you giving up more than you should.
Why timing and documentation matter
Even if you land on a method, timing still complicates things. Valuation usually happens around the date of separation, but that date is not always set in stone. If your business surged after you split or dipped right before, those swings might affect what’s considered fair.
Clean books and current records help anchor the process in reality. Without them, things get blurry – and blurry doesn’t usually work in your favor.
Don’t wait until the numbers work against you
If you’re heading into divorce with a business in the mix, the math isn’t something to figure out later – it’s what shapes the whole negotiation. Numbers can work for you or against you, depending on how prepared you are. So before you agree to anything, make sure the value being placed on your business actually reflects the work, risk and reality behind it.
