Sep. 22, 2025
When a Spouse Owns a Business: Valuing and Dividing Closely Held Companies in North Carolina Divorce
A closely held business is any company whose shares are not publicly traded, often run by a small group of owners or even a single individual. During divorce, questions of ownership, control, and future income all come to the forefront. The stakes are high—these companies often represent a family’s largest asset and a source of ongoing livelihood. Accurate valuation and fair division become critical, especially when both financial security and the company’s survival are on the line. Mercedes O. Chut, P.A. has extensive experience in guiding clients through these challenging situations with careful planning.
Is the Business Marital or Separate Property?
Before any valuation takes place, the court must decide whether the business—or some part of its value—is “marital property.” Under North Carolina law, marital property includes most assets and debts acquired by either spouse during the marriage, regardless of who holds legal title. Separate property includes assets owned before marriage or acquired by gift or inheritance.
However, business ownership is rarely black and white. For example, if a business was started before marriage but grew significantly during the marriage, or if marital funds were used to support or expand the company, the increase in value may be considered marital property subject to division. This distinction is critical, and courts look at how the business was managed, how profits were used, and whether both spouses contributed to its success (even through unpaid labor or supporting the owner’s efforts).
How Are Closely Held Companies Valued?
Valuing a closely held company is one of the most challenging aspects of divorce litigation. The process often requires forensic accountants, business appraisers, or even court-appointed experts to review financial statements, tax returns, contracts, and intangible assets like goodwill and brand reputation. Common valuation methods include:
- Asset-based approach – Calculates value based on company assets minus liabilities.
- Income approach – Projects future earning potential and discounts to present value.
- Market approach – Compares the company to similar businesses that have been sold.
The choice of method—and the assumptions behind it—can significantly impact the final number. For example, how should a professional practice be valued when its income is closely tied to the personal reputation or skill of the owner? North Carolina courts have addressed this issue in cases such as Poore v. Poore, 331 S.E.2d 266 (N.C. App. 1985), holding that personal goodwill (based on the individual’s skills and relationships) is generally not divisible, but enterprise goodwill (connected to the business itself) may be. If you are concerned about the value of your business or your spouse’s company, an experienced divorce attorney in Greensboro, NC can guide you through the process and ensure your interests are protected.
What Happens After Valuation?
Once the business value is determined, the next step is equitable distribution. In North Carolina, this does not always mean a 50/50 split, but rather a division the court deems fair based on a list of statutory factors. Judges will consider contributions by each spouse, tax consequences, the need to protect an ongoing business, and whether the asset is “liquid” (easy to divide) or “illiquid” (tied up in the business).
Frequently, the court awards the business to the spouse most involved in day-to-day operations, while the other spouse receives an offsetting share of other marital assets or a structured payout over time. This approach protects the company’s continued viability while ensuring both parties receive a fair share of marital wealth. For business owners worried about keeping the doors open, the law provides room for creative solutions that avoid a forced sale or unwanted third-party ownership.
If you want to discuss how business ownership or other assets could be affected by divorce, schedule a confidential consultation with a Greensboro family law attorney.
Why Every Greensboro Owner Needs a Top-Rated Divorce Lawyer
When a business is at stake in divorce, the outcome will shape your financial stability for years to come. Mercedes O. Chut, P.A., the trusted family law attorney Greensboro NC relies on, delivers the sophisticated analysis, strong negotiation, and tireless advocacy you need to achieve a fair result—whether you own the business or your spouse does. Protect what matters most; contact us today to schedule a confidential review with a divorce lawyer in Greensboro for clear answers and practical legal solutions.
