Common Methods of Business Valuation in Illinois Divorce Cases

 Posted on August 18, 2025 in Business Valuation

When a couple divorces in Illinois, dividing property often becomes one of the most contested issues. If one spouse owns or co-owns a business, determining the fair value of that business is critical. The court must know the accurate value to ensure an equitable division of marital property. An experienced Kane County, IL business valuation attorney can help you navigate the complex process of business valuation and protect your financial interests.

Most Common Approaches to Business Valuation in an Illinois Divorce

Illinois courts recognize several accepted approaches to valuing a business during divorce. The Illinois Marriage and Dissolution of Marriage Act, found in 750 ILCS 5/503, requires courts to divide marital property fairly, though not necessarily equally. To do this, the court often relies on expert testimony about the value of a business. The most common valuation methods include:

• Income approach: This method estimates the present value of a business based on expected future earnings. Experts may use past financial data and market conditions to project future income.

• Market approach: This method compares the business to similar companies that have been sold. Like real estate appraisals, this approach depends heavily on finding comparable sales.

• Asset-based approach: This method determines value by adding the company’s tangible and intangible assets and subtracting liabilities. It is often used for businesses that have significant assets but limited cash flow.

Each approach may produce a different result, which is why the court and your attorney carefully review the circumstances of your case before making a decision.

Why Does Business Valuation Matter in an Illinois Divorce?

Business valuation is not just about numbers. It has a direct effect on how marital property is divided. A proper valuation ensures that neither spouse receives more or less than what is fair. For example, if the value of a family-owned business is underestimated, the non-owner spouse may be unfairly deprived of their share. On the other hand, an inflated valuation could place an unrealistic financial burden on the spouse who continues to operate the business. Correct valuation ensures that settlements, buyouts, and property distributions are based on accurate information.

How Do You Choose the Right Business Valuation Method for Your Divorce?

Choosing the right valuation method depends on the type of business, its financial health, and the purpose of the valuation. For instance, service-based businesses with minimal physical assets may be best valued through the income approach. Manufacturing companies with significant equipment and inventory may be better suited for the asset-based approach. A business that closely resembles others on the market may be most accurately valued through the market approach.

Because no single method is perfect, attorneys often work with financial experts to ensure that the chosen method reflects the true economic value of the business. This prevents disputes and supports fair outcomes in divorce proceedings. 

Contact a Geneva, IL Business Valuation Attorney Today

If you are facing a divorce that involves business ownership, you will need legal guidance. The Kane County, IL business valuation lawyers at The Law Offices of Douglas B. Warlick & Associates provide the personalized guidance of a boutique law firm, giving each client focused attention. 

Founding Attorney Douglas B. Warlick has practiced law since 1981, earning respect from judges and colleagues throughout Kane County and beyond for his integrity, professionalism, and deep knowledge of family law. Trained in collaborative law but fully prepared to go to court when necessary, he combines over 35 years of experience with a reputation for excellence and effectiveness. When you work with our firm, you can expect advocacy tailored to your needs and representation grounded in trust and proven results. Call us today at 630-232-9700 to schedule your initial consultation.