Business Valuation in Divorce Calculator
Estimate your business's value using three standard approaches: income (SDE multiple), asset book value, or market comparables — and calculate the marital portion subject to division.
Income / Earnings Method
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Excluding owner salary$
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What you'd pay to hire someone to do your jobx
Typical range: 2x – 4x for small businessesEstimated Business Value (income method)
$562,500
Seller's Discretionary Earnings$295,000/yr
Normalized SDE$225,000/yr
Marital Portion (75.0%)$421,875
Spouse's Share$210,938
Pre-Marriage Separate Value$140,625
These are estimates. A Certified Business Appraiser (CBA) or Certified Valuation Analyst (CVA) should provide the official valuation for divorce proceedings.
Advanced Analysis
3 Methods Comparison · Goodwill Analysis · Marital vs Separate
Business Financials
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3-Method Business Valuation Comparison
$509,167 average of 3 methods
Gross Profit$390,000
EBITDA$222,000
SDE (Seller's Discretionary)$317,000
Income Method (2.5x SDE)$792,500
Asset Method$215,000
Market Method (0.8x rev)$520,000
Valuation Range$215,000 – $792,500
Income Method (SDE)2.5x SDE$792,500
Asset MethodBook value + intangibles$215,000
Market Method0.8x revenue$520,000
Average of 3 MethodsBlended$509,167
SDE Multiples by Industry: Service businesses: 1.5–3x | Retail: 1–2x | Professional practices: 0.5–1.5x revenue | Technology: 3–6x | Restaurants: 1–2x
Professional Model
DCF Model · Full Discount Analysis · Sensitivity Table
DCF Model Inputs
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DCF Valuation Results
$1,194,718 enterprise value
FCF Present Value$382,249
Terminal Value PV$812,469
Enterprise Value$1,194,718
After All Discounts$609,306
Marital Portion (80%)$487,445
Spouse Share (50%)$243,723
RevenueCumulative PVFree Cash Flow
Valuing a Business in Divorce
A business owned by one or both spouses is often the most contested asset in a divorce. Unlike a bank account, a business has no single obvious value — it must be appraised. Courts and attorneys use three standard approaches:
- Income Method: The most common for operating businesses. Value is based on normalized earnings (SDE or EBITDA) multiplied by an industry-specific multiple.
- Asset Method: Based on the fair market value of all business assets minus liabilities. Best for asset-heavy businesses or those with minimal profit.
- Market Method: Compares the business to recent sales of similar businesses ("comparables"). Requires access to transaction databases.
The Formula
Income Method:
SDE = Revenue − Expenses + Owner Salary
Normalized SDE = SDE − Market-Rate Replacement Salary
Value = Normalized SDE × SDE Multiple (typically 2x–4x)
Asset Method:
Value = (Total Assets − Liabilities) + Goodwill
Market Method:
Value = (Revenue × Revenue Multiple + EBITDA × EBITDA Multiple) ÷ 2
Marital Portion = Business Value × (Years Married ÷ Years in Business)
Spouse's Share = Marital Portion × Split Percentage
SDE = Revenue − Expenses + Owner Salary
Normalized SDE = SDE − Market-Rate Replacement Salary
Value = Normalized SDE × SDE Multiple (typically 2x–4x)
Asset Method:
Value = (Total Assets − Liabilities) + Goodwill
Market Method:
Value = (Revenue × Revenue Multiple + EBITDA × EBITDA Multiple) ÷ 2
Marital Portion = Business Value × (Years Married ÷ Years in Business)
Spouse's Share = Marital Portion × Split Percentage
Worked Example
Example: Valuing a Plumbing Business
Dan owns a plumbing business he started 12 years ago. He and Sarah married 9 years ago. Revenue is $620,000/yr, expenses are $410,000, and Dan pays himself $85,000. The market salary for a plumbing contractor is $70,000.
Gross Profit$210,000
SDE (+ owner salary)$295,000
Normalized SDE (− market salary)$225,000
Value at 2.5x SDE$562,500
Marital Fraction (9÷12)75%
Marital Portion$421,875
Sarah's 50% Share$210,938
Frequently Asked Questions
Enterprise goodwill is the transferable value of a business — its brand, customer relationships, and systems that would survive if the owner left. Personal goodwill is tied to the owner's individual reputation and skills; it leaves with them. In divorce, most states only divide enterprise goodwill. Personal goodwill is often considered separate property because the non-owner spouse has no claim to their ex's future earning power.
For significant businesses, yes. A Certified Business Appraiser (CBA) or Certified Valuation Analyst (CVA) typically charges $3,000–$15,000 for a formal appraisal. If the business is worth more than $200,000, this cost is usually justified by the accuracy and defensibility of the result in court.
In most states, yes — if the business was started or grew significantly during the marriage. Marital property includes assets acquired during the marriage regardless of who ran them. However, if the business was started before marriage and kept strictly separate, the pre-marital portion may be excluded.
SDE multiples vary by industry and business size. Small service businesses (HVAC, plumbing, cleaning) typically sell at 1.5x–3x SDE. Restaurants: 1x–2x. Professional practices (medical, dental, accounting): 0.5x–1.5x of revenue. Tech-enabled businesses: 3x–6x SDE. A business broker can provide current industry data.
Yes, in most cases. Common outcomes include: (1) One spouse buys out the other's share using other marital assets; (2) The non-owner spouse receives a structured payout over time from business cash flow; (3) The business is sold and proceeds divided. Forced co-ownership post-divorce is rare and generally unworkable.
Official Sources & References
When to Consult a Family Law Attorney
Business valuation in divorce is one of the most contested areas in high-asset cases. Consult a licensed family law attorney and a Certified Business Appraiser (CBA) or Certified Valuation Analyst (CVA) when a business represents significant marital assets. The distinction between personal goodwill (non-divisible) and enterprise goodwill (divisible) can have a major financial impact on your settlement — this distinction typically requires expert testimony to defend.