Understanding the Business Valuation Process in a Texas Divorce

 Posted on May 07, 2025 in Divorce

Building a business with a spouse is a major achievement. If the marriage falls apart, what will happen to the company you poured so much effort into together? In Texas, divorces involving businesses are generally more complex. You have a few options for dividing the company, but first, you need to know the business valuation process, namely, the purpose and methods involved. A Tarrant County, TX business valuation attorney understands the legal process and will ensure that you have a fair share of the investment you made.

Is a Business Considered Community or Separate Property in Texas?

Under the Texas Family Code, property is either categorized as community or separate property during a divorce. Separate property is anything that either spouse owned before the marriage or received as an inheritance or a gift during the marriage. Community property is acquired by either spouse during the marriage and is divided equally in the event of divorce.

If your business was set up before the marriage or received by inheritance or gift, it could be separate property. However, if its value increased during the marriage, and your spouse contributed to its growth, the value of its growth would qualify as community property and be subject to division. Whether your business is separate, community, or commingled will impact the valuation process.

How Does Classification as Community or Separate Property Impact Business Valuation in Texas?

When your business is classified as separate property, the valuation process focuses on how much the business was worth when you got married and how much it grew during the marriage. Using that logic, if you started the business during the marriage, its entire value is subject to a 50/50 division.

What Are the Methods of Valuing a Business in a Texas Divorce?

Texas courts generally employ one of the following methods for business valuation:

• The fair market value approach: This method bases the value of the business on how much a buyer would be willing to pay on the market. It accounts for market trends, comparable business sales, and the business’s performance.

• Income-based valuation: This method focuses on the business’s potential for future earnings, as well as its overall value. It requires professional forecasting and consideration of cash flow, industry benchmarks, and financial projections.

• Asset-based valuation: Using this method, the business’s value is determined by deducting the value of liabilities from the value of assets. The assets can include real estate, inventory, equipment, and more.

Many challenges can arise during a valuation, but an experienced attorney will ensure you know the legal options available to you and help you resolve any disputes.

Contact a Hurst, TX Business Valuation Attorney for a Free Consultation Today

Divorce can undoubtedly be challenging, but throwing a business into the mix can make it significantly more complicated. At Daniel R. Bacalis, P.C., we understand how important it is to be proactive. Getting accurate business valuation ensures you get the most of the time and effort you put into the company, and a Tarrant County, TX business valuation lawyer will walk you through every step of the process to ensure your rights are well protected. Call 817-498-4105 to schedule a free consultation today.