Davis Schuler& AssociatesCDFA® Practice
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Business Valuation

Fair market value, normalized earnings, goodwill, and methodology for divorce business valuations.

Business Valuation

How is a business valued during a Utah divorce?

A business is valued in a Utah divorce by determining its fair market value - the price a willing buyer would pay a willing seller, both with full knowledge of the facts. A Certified Valuation Analyst (CVA) or business valuation professional typically uses three approaches: the income approach (based on earning power), the market approach (based on comparable sales), and the asset approach (based on net assets). The valuation also normalizes the financial statements by removing owner perks, excess compensation, and nonrecurring expenses to reveal the business's true earning power.

Business Valuation

What is normalized EBITDA in a divorce business valuation?

Normalized EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the business's true earning power after removing owner perks, personal expenses, nonrecurring costs, and excess compensation. In a divorce business valuation, normalization is essential because owners often run personal expenses through the business, pay family members above-market rates, and claim one-time deductions that don't reflect ongoing operations. Normalized EBITDA reveals what the business actually earns - not what the owner chose to report - and is the foundation for determining fair market value.

Business Valuation

What is the difference between personal goodwill and enterprise goodwill?

Personal goodwill is the value of a business tied to the individual owner's skills, reputation, and personal relationships - value that would not transfer to a buyer. Enterprise goodwill is the value that exists independently of the owner and can be transferred to a new owner - things like brand, systems, customer lists, and location. In a Utah divorce, this distinction matters because personal goodwill may be treated as the owner's separate property, while enterprise goodwill is generally marital. The allocation can significantly change what portion of the business value is divided.

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