Business owners in the midst of divorce tend to arrive with the same questions: Will I lose the company? Does my spouse get half? How do we value the business?

These are the right questions, but the answers in Virginia are not as straightforward as most business owners would hope. For example, Virginia addresses value different than the market does and include specific considerations for “goodwill” and post-separation growth.

Here is what the law provides, and where owners (and the spouses sitting across from them) tend to guess wrong.

Virginia does not ask for what your business would sell in the open market.

Most business valuations assume fair market value: the price a hypothetical willing buyer would pay a hypothetical willing seller. Virginia, however, considers the intrinsic value of the business.

Intrinsic value asks what the business is worth to these parties, in their current circumstances, rather than what it would sell for on an open market that may not exist for a small closely held company. A court is valuing the marital partnership it is dissolving, not an open market sale. This distinction comes from Bosserman v. Bosserman, 9 Va. App. 1, 6 (1989).

That single difference drives much confusion or mis-assumptions in a divorce proceeding. If the question were market price, a buy-sell formula would be close to dispositive and standard appraisal discounts would apply. However, because the question is worth-to-these-parties, neither is true.

Our earlier post, Untangling Finances in Divorce: How Business Valuations Impact Divorce, walks through the three valuation approaches an expert may use (asset-based, income, and market) and how goodwill is treated. This post picks up where that one leaves off, and at the point where owners are most often surprised.

Operating agreements are not dispositive of value.

Many owners believe their exposure is capped, because the operating agreement or shareholder agreement dictates what a departing owner will receive, i.e., a formula price, book value, or a fixed multiple.

In a Virginia divorce, that provision is evidence. It is not the answer.

Bosserman involves this issue. A restrictive agreement required a shareholder to offer stock back to the corporation at "true book value," and the husband argued that that figure controlled what his interest was worth for equitable distribution. Bosserman, 9 Va. App. at 3. The Court of Appeals held that the restriction must be considered by the trial court, but is not automatically dispositive of value. Id. at 7.

The same logic applies to the discounts owners expect. Minority interest discounts and discounts for lack of marketability are routine in an ordinary appraisal, but they are not applied automatically here. A court is not required to accept a discount simply because an appraiser would normally take one. The party seeking such a discount has the burden to show why it fits this business and with evidence specific to this company.

What you built after you separated may be yours.

Virginia values marital property as of the date of the evidentiary hearing for purposes of valuation, not the date of separation. Va. Code Ann. § 20-107.3(A) (2026). While either party can ask for a different date, it takes a motion filed at least 21 days before the hearing and a showing of good cause. Id.

If the business grew between separation and trial, is all of that growth on the table?

Not necessarily. Virginia distinguishes between appreciation that is passive (market conditions, the economy, growth that would have happened anyway) and appreciation that comes from one spouse’s active efforts after separation. Active post-separation growth may be separate property.

In one Fairfax County case, an owner held 93 percent of an accounting practice. The business gained roughly $29,000 in value between separation and the valuation date. The expert assigned $26,000 of that increase to the owner's own post-separation efforts, making it the owner’s separate property. The court treated approximately $3,000 as passive income and therefore marital. See Sultan v. Malik, No. 0747-19-4 (Va. Ct. App. Apr. 28, 2020).

The practical lesson is documentation. If you landed the clients, rebuilt the team, or opened the second location after your spouse moved out, that story has to be provable, not merely asserted.

The same dollar can be counted twice.

When an expert values a business using an income approach, one of the first adjustments is owner’s compensation. If you pay yourself below market, the expert adds the difference back, which raises the company’s earnings and therefore its value. If you pay yourself above market, the reverse happens.

Then the same income may show up again, i.e., it may be available for spousal and child support. In other words, one stream of money can enlarge the asset your spouse is bought out from and set the support you pay on top of that buyout. Owners experience this as being charged twice for the same dollar, and the frustration is understandable. It is also, in broad terms, how the system works: property division and support are separate statutory exercises, governed by different factors.

What can be addressed is the double-counting that is genuinely improper, and the compensation figure itself. The "reasonable compensation" number an expert selects is an opinion, not a fact, and it is contestable. It is one of the highest-leverage figures in the entire case, because it moves the valuation and the support number at the same time.

Our posts on Taxes and Divorce and Support Valuations Explained cover the two halves of this separately. The place they meet is your compensation line.

If you are the spouse who does not own the business:

Three things worth knowing:

You are unlikely to end up owning the business. Unless both spouses are already owners, Virginia courts do not transfer business interests. The court grants a monetary award, payable in a lump sum or over time, enforceable like any other money judgment. The court will not and cannot transfer ownership interest in the business to the non-owning spouse. Christian Lapham's post on divorce considerations for entrepreneurs and business owners covers this point in more detail. You are negotiating a number, not a seat at the table.

Goodwill is worth the fight. Virginia distinguishes enterprise goodwill, which attaches to the business and is marital, from personal goodwill, which attaches to the individual and is separate. For a practice built on one person’s name and relationships, the pie is sliced differently than if the entire business is made up of enterprise goodwill. We will provide more on this issue in future topics, but be mindful that goodwill is a significant consideration.

Be mindful of the valuation date. Because value is set at the hearing, a business that is quietly drained, loaded with debt, or allowed to decline between separation and trial can arrive at court worth far less than it was worth at separation. When this is the case, an alternate valuation date exists to value the business at a time other than divorce. Virginia courts have moved the date where a spouse improperly dissipated assets, but it takes a timely motion and proof, which means noticing early rather than at trial.

The expert matters more than the method.

Virginia has no mandatory formula. The Court of Appeals has said as much in Russell v. Russell, 11 Va. App. 411, 417–18 (1990), holding that there is no single acceptable method for valuing the goodwill of a professional practice.

In Sultan, cited above,, two credentialed experts valued the same company. One averaged all three approaches and assigned 81 percent of goodwill to the owner personally, arriving at a marital interest of $27,400. The other used the asset-based approach and assigned 30 percent of intangibles to personal goodwill, arriving at $100,000.

The judge called it a battle of experts. He found one witness "conservative and reasonable." He found the other "came across as an advocate," delivering what sounded like a canned presentation, with analysis that appeared result-oriented. He adopted the $100,000 figure, and the Court of Appeals affirmed. Using your expert exactly as he/she was intended to value the business is integral to any business evaluation, separation of goodwill, and determination of whether goodwill is separate or marital.

Frequently asked questions

Can I lose my business in a Virginia divorce?
Losing ownership is uncommon. If your spouse is not already an owner, the likely outcome is a monetary award reflecting the marital share of the value, not a transfer or sale of the company.

Does my spouse automatically get half?
No. Virginia is an equitable distribution state, which means marital property is divided fairly based on statutory factors. Fair does not mean equal, and not all of a business is necessarily marital.

Can I sell the business before filing?
Selling or transferring a business to reduce what your spouse receives is a serious mistake. Courts treat dissipation harshly, and it is one of the clearest grounds for moving the valuation date or adjusting the award.

My spouse never worked in the business. Does that matter?
It is one factor among several, but it is rarely dispositive on its own. Marital funds, marital time, and growth during the marriage can all make a business or part of it marital regardless of who ran it.

Are business valuation fees in a divorce tax deductible?
Treat this as a question for your tax advisor rather than a general rule. Our post on taxes and divorce covers the broader tax picture.

Talk to someone before the numbers harden.

The decisions that matter most in these cases happen early: which expert, which valuation date, what gets documented about post-separation work, and how compensation is characterized. By the time competing reports are filed, most of the room to maneuver is gone, so it is important that you have hired the right attorney from the start.

If you are navigating a divorce that involves a business, please contact Jennifer McCammon at (703) 525-4000 or jmccammon@beankinney.com.

This article is for informational purposes only and does not contain or convey legal advice. Any views or opinions expressed herein are those of the authors and are not necessarily the views of the firm or any client of the firm.