How is a business valued and distributed in a divorce in Virginia?

In Virginia, businesses and their property are part of the marital estate in a divorce whether one or both spouses own them. In general, divorce laws in the Commonwealth of Virginia require that all marital property be divided equally. However, valuing business property can be more complicated than real estate, investment accounts, and other property that married couples frequently own.

How Business Property Is Valued and Distributed in Norfolk Divorces

Business property is not valued by a fair market value or a willing buyer-willing seller standard in our state. Instead, the courts focus on the intrinsic value of the company, which is a more subjective standard that looks at its value to the divorcing couple. One of these approaches is used to arriving at its worth:

• Income-excess earning. This is often the approach used when valuing a professional practice. It compares the business owner’s income to the average income of someone in their peer group. If the person’s income is greater than those in his peer group, it is considered excess income and apportioned as part of the business’ value. Then this value is projected into the future.
• Asset valuation. When using this approach, the assets of the business are valued to determine its worth.
• Market valuation. The market value analyzes the selling prices of similar property to determine a company’s value.

When dividing a business in a divorce, the spouse who owns the business will most likely not be required to sell it or share operating it with the other spouse. If the company is a valuable asset, a portion of its value may be paid to the non-business owning spouse as part of the property settlement.