Dividing a Business in Divorce: How Business Valuation Works
What Happens to a Business in a Divorce? Understanding Valuation & Division
When a family-owned business or jointly owned company is involved in a divorce, determining its value is a crucial step in the property division process. Whether the business is fully or partially owned by one spouse, its financial worth must be carefully assessed to ensure an equitable distribution of marital assets.
The process typically involves hiring a forensic accountant to conduct a comprehensive business valuation. This expert will analyze profit and loss statements (P&Ls), accounts receivable, business assets, and financial records to determine its true market value. If the business operates in a specialized industry—such as construction, hospitality, or professional services—a business-specific valuation expert may be required to provide an accurate assessment.
It is important to note that the business itself will not be divided or dissolved. Instead, the value of the business must be equitably distributed between the divorcing spouses. If the business was founded or significantly expanded during the marriage, its value is considered a marital asset. In many cases, one spouse retains ownership while compensating the other through asset division or financial settlements.
If you or your spouse owns a business, working with an experienced divorce attorney is essential to ensure a fair and accurate valuation while protecting your financial interests.
