Divorce, Business Ownership, and the Value of Getting the Numbers Right

When a business owner goes through divorce, emotions run high—but outcomes are determined by details.

For those who’ve built something with integrity, the goal is not to hide, manipulate, or “win at all costs.” The goal is to resolve matters properly, protect what was built, and move forward with clarity. That is where the right forensic accounting expert becomes essential.

Not All Accountants Are the Same in Divorce

There are many forensic accountants who work in the divorce arena, evaluating businesses and cash flow. Some simply “crunch numbers.” Others take a far more sophisticated and thoughtful approach—one that understands both the legal process and the real-world operation of a business.

This distinction matters.

Many business owners believe they can rely on their longtime accountant or avoid using a forensic expert altogether. While understandable, this is often a costly mistake. Divorce requires a different lens. A forensic accountant is trained to analyze, defend, and explain financial realities in a legal setting—not just prepare tax returns.

Cost vs. Value: A Critical Perspective

A forensic engagement can be tailored. An expert may perform a limited analysis to control costs or a more comprehensive investigation when circumstances require it.

Consider this:
If a forensic report costs $15,000 but results in an additional $75,000–$100,000 (or more) in equitable distribution, was it worth it? I have had a few cases also where using the right forensic accountant cost 6 figures, but the client also gained more than 7 figures.

In my experience, I have never used a forensic accountant where the client did not benefit. Sometimes the benefit is modest. Sometimes it is substantial. But the value is almost always there when the expert is chosen wisely.

Credentials Matter—But So Does Judgment

Forensic accountants must follow established procedures to maintain credibility. However, procedure alone is not enough.

The best experts bring judgment, attention to detail, and context to their analysis. Business valuation is not a mechanical exercise—it is interpretive.

When selecting an expert, credentials matter. Some of the key qualifications include:

• ASA (Accredited Senior Appraiser)
• CPA/ABV (Accredited in Business Valuation)
• NACVA (National Association of Certified Valuators and Analysts)

Equally important is how the expert approaches the work. Two well-qualified forensic accountants—on opposite sides of a case—who perform thorough and honest evaluations often become the most instrumental players in reaching settlement.

What a Good Forensic Report Actually Does

A quality forensic report typically includes:

• Detailed analysis of historical financial performance
• Thoughtful projections where appropriate
• Multiple valuation methods, such as:
  • Market comparables
  • Asset-based approaches
  • Income-based valuations using capitalization rates
• “Normalization” adjustments, including:
  • Owner perks
  • Related-party transactions
  • Non-recurring or discretionary expenses

These adjustments are often where disputes arise—and where documentation matters.

A Real-World Lesson on Documentation

Recently, I worked with a client who regularly took clients and prospective employees to restaurants for business development. The forensic accountant added a significant portion of those expenses back as personal.

We challenged it—but the argument was weakened by a lack of documentation. No receipts. No notes. No record of who attended or what was discussed.

Without proof, it is extremely difficult to establish that expenses were 100% business-related. Integrity must be paired with records.

Downturns, Reinvestment, and Timing

It is not uncommon for a business owner to experience a downturn around the time of divorce. Sometimes this is due to reinvesting in the business or paying down debt instead of showing profit. Other times, the downturn is very real—COVID, interest rate shifts, or recent disruptions in commercial real estate are prime examples.

In many cases, business stress contributes to marital breakdown, not the other way around. A skilled forensic accountant understands how to distinguish temporary conditions from long-term value.

“The Business Has No Value Without Me”—A Common Misconception

Many small business owners believe their business has no value without them. Emotionally, this can feel true. Legally and financially, it often is not.

Very simply:
If a business earns profit above reasonable compensation for the owner’s role, it has value.

For example:
If a dentist could hire another dentist for $175,000 to do the clinical work, but the owner earns $275,000, the business clearly generates value beyond labor alone.

Understanding this concept early can prevent unrealistic expectations and unnecessary conflict.

The Right Team Leads to Intelligent Resolution

Divorce is not the time to cut corners or rely on assumptions. For business owners who value integrity, the best outcomes come from assembling the right team—experienced counsel, thoughtful forensic accountants, and sound financial advisors—all focused-on accuracy rather than gamesmanship.

When the numbers are right, settlement becomes possible.
When settlement becomes possible, everyone moves forward faster—and with dignity intact.