How Is a Business Valued in a Divorce? A Guide for the Spouse Who Doesn't Own It

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A business in a divorce is usually valued by a credentialed business valuator using some mix of three methods. They look at what the company earns, what similar companies sell for, and what its assets are worth. In Ohio, the marital share is generally the value created during the marriage, including growth driven by either spouse's work. The owner usually keeps the business, and the other spouse receives their share of its value in other ways.

If your spouse owns the business, you are often the person who knows the least about it, with a lot riding on the number. The owner has the books, the accountant, and the history. You may have a feeling that the company is doing better than the tax returns say, or you may simply have no idea what it is worth. This guide is written for you. It explains which parts of a business are marital, how the value gets determined, where the number can quietly shrink, and what to ask for so the settlement rests on facts.

Written by Leah Hadley, CDFA®, AFC®, MAFF™, founder of Intentional Divorce Solutions. Last reviewed November 2026. We use Ohio law as the main example because that is where we are based. Divorce law varies by state, and Intentional Divorce Solutions does not provide legal advice. For legal advice, contact an attorney who practices in your jurisdiction.

Is My Spouse's Business Marital Property?

Usually at least part of it is. In Ohio, Ohio Revised Code 3105.171 controls the answer, and the starting point is when and how the business came into the marriage.

A business started during the marriage is generally marital, no matter whose name is on the paperwork or who runs it day to day. A business one spouse owned before the wedding starts out as separate property, but that is rarely the end of the story. Under ORC 3105.171(A)(3)(a)(iii), income and appreciation on separate property that come from either spouse's labor, money, or in-kind contribution during the marriage are marital. Passive growth, meaning growth that happened without that kind of contribution, stays separate.

For a business, that distinction carries real weight. An owner who spent fifteen years building a company was contributing labor the entire time. The Ohio Supreme Court applied this rule in Middendorf v. Middendorf, 82 Ohio St.3d 397 (1998), holding that the increase in value of a stockyard one spouse owned before the marriage was marital because his labor during the marriage produced it. Ohio appellate courts have also said that the spouse arguing growth was passive carries the burden of proving it.

Your own contributions count too. If you kept the books, answered the phones, ran payroll, or put marital savings into the company, tell your attorney. The statute specifically includes in-kind contributions.

Situation	What Is Typically Marital in Ohio	What Helps Establish It
Business started during the marriage	The whole business	Formation documents and the date the company was registered
Business owned before the marriage, owner worked in it	Growth in value during the marriage caused by that work	A value on the wedding date and a value at the end of the marriage
Business owned before the marriage, purely passive investment	Possibly none of the growth, if it truly was passive	The owner must show neither spouse's effort or money drove the increase
Inherited or gifted business interest	The original interest is usually separate, active growth during the marriage is usually marital	Estate or gift documents, plus the same two-date valuation
Marital money invested in the business	That contribution and the growth it produced	Bank records showing transfers from joint accounts into the company
Interest covered by a prenuptial agreement	Whatever the agreement says, if it is valid	The agreement itself and how it was signed

The rules for classifying property in general are covered in our guide to separate vs. marital property.

What Date Is the Business Valued As Of?

For dividing property, Ohio law treats the marriage as running from the wedding date through the date of the final divorce hearing, under ORC 3105.171(A)(2). If using the final hearing date would be unfair, the court can choose a different date, often called a de facto termination date. The Ohio Supreme Court recognized this in Berish v. Berish, 69 Ohio St.2d 318 (1982), noting that equity may occasionally require valuation as of the date the marriage ended in fact. Courts generally look for a clear separation of lives and finances, and the court has to state in writing which dates it used.

For most assets, a few months either way makes little difference. For a business it can matter a great deal. A company can grow quickly after a separation, or its revenue can dip right after the divorce is filed. The date chosen decides which of those changes count. If the business changed significantly between your separation and the final hearing, raise the valuation date with your attorney early, because it shapes everything that follows.

Who Should Value the Business?

A business valuation should be done by someone credentialed to do it. Common credentials include the Certified Valuation Analyst (CVA), Accredited in Business Valuation (ABV), and Accredited Senior Appraiser (ASA). For cases where income or assets may be hidden, a forensic accountant or a Master Analyst in Financial Forensics (MAFF™) adds a tracing and investigation skill set that a standard valuation does not cover.

You generally have three options.

One neutral valuator hired jointly, with both spouses sharing the cost and the information. This is common in mediation and keeps costs down.
Each spouse hires their own expert. This is common in contested cases. It costs more, and the two reports often land far apart.
A limited-scope report. For smaller businesses, a shorter Calculation of Value report or an equipment appraisal may be enough. Our post on small business valuation in divorce mediation covers these lower-cost alternatives.

If you are divorcing through mediation, you have more control over how the business gets valued, including whether a full valuation is needed at all. Melissa Gragg, a mediator and business valuation expert, joined me on the podcast to talk about why these valuations get so emotional and how to keep them transparent. You can listen to Beyond the Breakup: Intentional Business Valuation in Divorce Planning.

How Do Valuators Actually Value a Business?

The standard most valuators start from is fair market value. IRS Revenue Ruling 59-60, the long-standing framework for valuing private companies, defines it as the price at which property would change hands between a willing buyer and a willing seller, when neither is under any compulsion and both have reasonable knowledge of the relevant facts. Ohio courts have not required any single method, so the valuator chooses among three main approaches and often uses more than one.

Approach	How It Works	Often Used For	What to Watch
Income approach	Converts the company's expected earnings into a present value	Profitable service businesses and professional practices	Which earnings were used, how owner pay was adjusted, and the rate used to account for risk
Market approach	Compares the business to sales of similar companies	Franchises and industries where businesses sell regularly	Whether the comparisons are truly similar in size, location, and profitability
Asset approach	Values what the company owns minus what it owes	Equipment-heavy companies, holding companies, and businesses with little profit	Whether equipment, real estate, and receivables are at current value rather than book value

Before any of these methods work, the valuator has to adjust the financial statements to reflect how the business really performs. This step is called normalization. Owners of private companies often run personal expenses through the business, pay themselves a salary well above or below what the job is worth, or put family members on the payroll. Each of those choices changes the reported profit. A good valuator adds back personal expenses and replaces the owner's actual pay with a market salary for the role. If you take one thing from this section, ask how the owner's compensation was handled. It is one of the largest swing factors in a small business valuation.

What Is Goodwill, and Is It Marital?

Goodwill is the value of a business beyond its physical assets, things like its reputation, customer relationships, location, and name. Valuators often split it into two kinds.

Business goodwill belongs to the company. It stays if the owner leaves, because customers come back for the brand, the location, the systems, or the team.
Personal goodwill belongs to the individual. It is tied to the owner's own skill, reputation, and relationships, and it walks out the door with them.

Whether personal goodwill is divisible in an Ohio divorce is not fully settled. An older Second District case, Kahn v. Kahn (1987), treated goodwill as part of the value of a medical practice. In September 2026, Ohio's Fifth District Court of Appeals held in Jordan v. Jordan, 2026-Ohio-3610, that personal goodwill in a solo dental practice is not marital property, which significantly reduced the marital value of that practice. The Ohio Supreme Court has not directly decided the question.

In practice, how goodwill is treated can depend on which appellate district your case falls in and on the facts of the business. Cuyahoga County appeals go to the Eighth District, for example. Ask your attorney how courts in your county have handled it, and ask your valuator to explain how they separated the two kinds of goodwill and why.

Can Discounts Lower the Value?

Sometimes. A discount for lack of control may apply when the interest being divided is a minority share that cannot direct the company. A discount for lack of marketability reflects that an interest in a private company cannot be sold quickly or easily. Ohio appellate courts generally treat whether to apply a discount, and how large, as a matter for the trial court based on the facts.

Discounts deserve close attention because they can be large and they are judgment calls. When the owner-spouse is keeping the business and has no plan to sell, it is fair to ask why a discount for being hard to sell should reduce what you receive. Your valuator or CDFA® can help you evaluate whether a proposed discount fits your situation.

Questions to Ask About the Valuation Report

Whoever prepares the valuation, you are entitled to understand it. These questions bring the judgment calls above into the open.

What standard of value and what valuation date did you use?
Which approaches did you use, and why did you weight them the way you did?
How did you adjust the owner's compensation and personal expenses?
Did you separate personal and business goodwill? How?
Did you apply any discounts, and what supports them?
What documents did you request that you did not receive?

How Can a Business Be Made to Look Less Valuable?

Most owners do not hide anything. But the owner does control the timing of income and expenses, and a business can look very different on paper than it does in real life. These are the signs worth watching for.

Revenue or profit that drops sharply right around the time divorce becomes likely
Customers who are suddenly told to pay later, or invoices that do not go out
New expenses, new employees, or family members added to the payroll
Large prepayments to vendors or repayments of loans to friends or relatives
A lifestyle that does not match the income on the tax returns
A cash-heavy business with no clear records of cash receipts
Loan applications or personal financial statements given to a bank that show a higher value or income than what is being disclosed in the divorce

Ohio law takes disclosure seriously. Under ORC 3105.171(E)(3), each spouse must fully disclose all assets, debts, income, and expenses. If a spouse engages in financial misconduct such as concealing or dissipating assets, the court can compensate the other spouse with a distributive award or a larger share of marital property under (E)(4). If a spouse substantially and willfully fails to disclose, (E)(5) allows a greater award of up to three times the value of what was not disclosed. Business interests are listed on the Ohio Affidavit of Property and Debt, the sworn financial disclosure filed in Ohio divorce cases.

If the warning signs are present, a forensic accountant or financial forensics analyst can trace what happened. Our guide to spotting hidden assets in a divorce explains how that work is done.

What Documents Should You Request?

The quality of any valuation depends on the records behind it. If your spouse owns the business, these are the documents your attorney or financial professional will typically want, covering at least the last three to five years.

Business tax returns, such as Form 1120-S, Form 1065, or Schedule C on your joint return
Profit and loss statements, balance sheets, and the general ledger
Business bank, credit card, and loan statements
Payroll records, including what the owner and any family members are paid
Accounts receivable and accounts payable reports
Operating agreements, shareholder agreements, and any buy-sell agreement
Loan applications and personal financial statements given to lenders
Any prior valuations, appraisals, or offers to buy the business
A list of major customers and how much revenue each brings in

Our divorce document checklist covers the rest of what to gather for the full financial picture.

How Is the Business Divided?

Usually, it is not literally divided. Ohio presumes marital property will be split equally under ORC 3105.171(C)(1), but the statute also tells the court to weigh the liquidity of the property and the economic desirability of keeping an asset intact. For an operating business, that typically means the owner keeps it and the other spouse receives their share of the value some other way.

Option	How It Works	For the Spouse Who Does Not Own It
Offset with other assets	You receive more of the house, retirement accounts, or investments to balance the business	Clean break and no ongoing tie to the business. Compare the assets after tax, since a dollar of 401(k) is not a dollar of cash.
Lump-sum buyout	The owner pays your share in cash, often by refinancing or taking a loan	The most certain option if the owner can finance it
Payments over time	The owner pays your share in installments under the decree	Ask for security, such as a lien, life insurance, and interest. Ohio law allows a distributive award to be secured by a lien.
Continued co-ownership	Both spouses keep ownership for a set period or indefinitely	Rarely a good fit after divorce. It works only with a detailed written agreement and a working relationship.
Sell the business	The company is sold and the proceeds divided	Sets the value by an actual sale, but takes time and the court must consider costs of sale

Can the Same Business Income Be Counted Twice?

This is called double dipping, and it comes up when the business is valued based on its future earnings. The concern is that the same income stream gets used twice, once to set the value of the business you are dividing, and again to calculate spousal support.

Ohio does not flatly prohibit it. In Gallo v. Gallo, 2015-Ohio-982, the Tenth District Court of Appeals held that Ohio law requires courts to consider income from all sources when setting spousal support. So rather than banning double dipping, the court said trial courts should factor its impact into their property division and support decisions in the interest of fairness. Other districts have followed that reasoning.

If you are the spouse who will receive support, expect the owner's side to raise this argument. It is not an automatic bar, but it can affect the support amount, the property split, or both. This is a good place to have your CDFA® model the settlement as a whole rather than one piece at a time.

What About Taxes?

Transfers of property between spouses as part of a divorce generally do not trigger tax at the time of transfer, under Section 1041 of the Internal Revenue Code. As IRS Publication 504 explains, the spouse who receives property also receives its original tax basis, so tax can come due later when the asset is sold. That is why we compare assets on an after-tax basis when deciding which assets to keep, and why Ohio law lists tax consequences as a factor in dividing property.

Two business-specific points are worth raising with a tax professional. First, if the company itself buys back the departing spouse's shares, known as a redemption, Treasury Regulation 1.1041-2 governs who is taxed, and it allows the spouses to agree in writing which of them bears the tax. That language belongs in the settlement, not as an afterthought. Second, if your share is paid over time, interest on the payments is generally taxable to you, even though the principal is a property settlement.

Frequently Asked Questions

Is my spouse's business marital property if it is only in their name?

Often, yes. The name on the business does not decide it. A business started during the marriage is generally marital in Ohio. A business owned before the marriage can still have a marital portion, because growth caused by either spouse's work or money during the marriage is marital.

Do I always need a formal business valuation in a divorce?

No. If the business has no value apart from the owner's own labor, there may be little to value beyond cash and equipment. For small businesses, a shorter Calculation of Value report or an equipment appraisal may be enough. For larger or disputed businesses, a full valuation by a credentialed valuator is usually worth it.

What date is a business valued as of in an Ohio divorce?

By default, the marriage runs from the wedding date through the final divorce hearing. The court can use a different end date, called a de facto termination date, if the final hearing date would be inequitable. The date can matter a lot for a business whose value changed after the couple separated.

Is goodwill divided in an Ohio divorce?

Business goodwill, which stays with the company, is generally part of the marital value. Personal goodwill, tied to the owner's own skill and reputation, is less settled. In 2026 the Fifth District held in Jordan v. Jordan that personal goodwill is not marital property, and the Ohio Supreme Court has not ruled on it. Ask your attorney how courts in your county treat it.

Can my spouse make the business look less valuable during the divorce?

An owner controls the timing of income and expenses, so it is possible. Warning signs include a sudden drop in revenue, delayed invoicing, new payroll, and a lifestyle that does not match reported income. Ohio requires full disclosure, and a court can award the other spouse more, up to three times the value of anything willfully not disclosed.

What is double dipping in a divorce?

Double dipping means using the same future income stream twice, once to value the business and again to set spousal support. Ohio does not prohibit it outright. Courts are expected to weigh its effect and keep the overall result fair, and it mainly arises when the business is valued based on its earnings.

How is a business usually split in a divorce?

The owner usually keeps the business, and the other spouse receives their share of its value through other assets, a lump-sum buyout, or secured payments over time. Selling the business or continuing to co-own it are less common because of the cost and the ongoing connection.

Do I pay taxes if my spouse buys out my share of the business?

Generally not on the property settlement itself, since transfers between spouses incident to divorce are usually tax-free under Section 1041 of the Internal Revenue Code. Interest paid on installment payments is generally taxable. If the company redeems your shares, a specific Treasury regulation applies, so the settlement should state in writing who bears the tax.

Get Help Understanding the Business Value

I started Intentional Divorce Solutions after going through my own divorce, and I have been a CDFA® since 2014. Our team works with clients before, during, and after divorce, and alongside their attorneys, mediators, and valuators, to make sense of business valuations, trace income and assets, and compare settlement options on an after-tax basis.

Start with the divorce document checklist to see what to gather, learn more about our divorce financial planning services, or reach out to our team to talk through your situation.

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