When a marriage ends, dividing assets can be one of the most difficult parts of the process—especially when a business is involved. For business owners and their spouses, understanding how to value a business for divorce is critical. The value of your company directly affects how property is divided, making accurate valuation essential for a fair outcome.
At Mims Ballew Hollingsworth, we help high-net-worth clients in Fort Worth, Southlake, and across North Texas protect their interests during divorce. Our Fort Worth divorce attorneys work together to analyze complex assets and ensure each client has a clear picture of what’s at stake.
Why Business Valuation Matters in Divorce
In Texas divorces, property is handled differently based on whether it’s community or separate property. Community property includes assets acquired during the marriage, while separate property belongs solely to one spouse if it was owned before marriage or acquired by gift or inheritance.
If a business was started or grew during the marriage, at least part of its value may be considered community property. That means it could be divided in the divorce.
An accurate business valuation in divorce ensures that each spouse receives a fair share of the marital estate. Without it, one spouse may unknowingly give up significant financial value.
To understand how this plays out, consider a Fort Worth couple where one spouse built a medical practice over ten years of marriage. Determining how much of that practice’s value was created during the marriage — and therefore how much is community property that must be divided between the spouses — requires professional valuation. Our Fort Worth property division attorneys are skilled in navigating these complex issues.
Common Methods of Business Valuation in Divorce
Courts and experts use several recognized approaches to determine business valuation for divorce. Each method provides a different perspective on what the business is worth.
Asset-Based Approach
This method adds up the value of the company’s assets—equipment, property, accounts receivable—and subtracts liabilities. It works best for businesses with significant tangible assets but may undervalue companies with strong goodwill or intellectual property.
Income Approach
This approach looks at the business’s earning potential. It estimates future income and converts it to a present value using an appropriate capitalization or discount rate. It’s common in professional practices or service-based companies where future revenue matters more than physical assets.
Market Approach
Here, the business is compared to similar companies that have recently been sold. It reflects what the market might pay for the business today. However, it can be difficult to find comparable data, especially for privately held companies.
Each approach has strengths and weaknesses. Often, valuation experts use more than one method to reach a balanced conclusion. Our high-net-worth divorce lawyers in Fort Worth often collaborate with financial experts to ensure a business is valued appropriately.
Challenges in Business Valuation During Divorce
Valuing a business during divorce is rarely straightforward. Disputes often arise over which method to use, how much certain assets are worth, or whether income has been underreported.
In some cases, a spouse may attempt to hide assets or understate income to reduce the business’s apparent value. Timing also matters—the value of a business can change significantly based on economic conditions or market trends.
These challenges make it essential to work with legal and financial professionals who possess a comprehensive understanding of both family law and business operations. At MBH, we have attorneys with extensive experience in both family law and business litigation. This dual expertise allows us to navigate the complexities that arise when a marital divorce also involves a business divorce. Our team’s deep understanding of business valuation, ownership structures, and financial operations ensures that our clients receive advice that protects both their personal and professional interests. Having business-savvy attorneys under one roof means we can anticipate issues others might overlook — a distinct advantage that sets our firm apart.
The Role of Forensic Accountants in Divorce
A forensic accountant plays a crucial role in divorce and business valuation. They dig deep into financial records to uncover hidden income, unreported cash, or suspicious transactions.
Courts often rely on these experts to verify numbers and provide testimony on how they arrived at a valuation. Their findings can make a major difference in how assets are divided and whether spousal maintenance or reimbursement claims apply.
At MBH, we work closely with forensic accountants to ensure the court has a clear, accurate understanding of the business’s value.
FAQs about Divorce and Business Valuation
How is a business valued in a Texas divorce?
A business is valued using accepted financial methods that assess assets, income, and market comparisons. Courts rely on expert opinions to determine fair market value.
What methods are used to determine business value during divorce?
The asset-based, income, and market approaches are the most common. Each considers different aspects of the business’s worth.
Can a business owner hide assets during valuation?
Some try, but forensic accountants are trained to uncover hidden income, off-the-book accounts, or manipulated records.
How do courts handle disputes about business valuation in divorce?
Courts may appoint neutral experts, review competing reports, and rely on testimony to resolve valuation differences.
Why is hiring a forensic accountant important in business valuation for divorce?
They ensure transparency and accuracy by tracing assets, analyzing income, and identifying inconsistencies.
Legal Guidance for Complex Divorce Cases
When business ownership is part of a divorce, experience matters. At Mims Ballew Hollingsworth, our attorneys combine extensive family law knowledge with business litigation expertise. Unlike many firms that assign cases to a single lawyer, we collaborate across our team to develop a strong, unified strategy for every client.
We help clients protect their business interests, understand their financial picture, and move forward with confidence.
If you are navigating a high-net-worth divorce or need guidance on valuing a business for divorce, contact us for a customized legal strategy and empathetic support.
Schedule a confidential consultation today.
