What happens to a closely held or small business in a divorce?

In a Texas divorce, a closely held business is treated as community property if acquired or grown during marriage, requiring a "just and right" division (often 50/50), even if only one spouse operates it. Property is classified based on funding source and date of formation, with community property subject to division through buyouts, continued co-ownership, or sale.

How is a small business valued for divorce purposes?

Because most couples cannot run a business together, the company must be valued by specialists, often considering goodwill and economic reality rather than just paperwork. Valuation typically involves expert appraisers and forensic accountants to analyze financial records and assets. The person who is surrendering the business should almost NEVER accept a "book value" valuation because such a valuation does not take into consideration future profits and the goodwill of the business.

What happens to a small business in divorce?

Assuming the business is community property, the parties or the judge can deal with the business in one of three ways. (1) Value the business, award it to one party and award the other party an equal amount of other assets from the marriage; (2) Award the business to one party and have that party pay the other party out over time if the community estate has insufficient assets to do a complete buy-out at the time of divorce; and (3) Award a one-half undivided interest in the business to each party and let them operate it together. Sometimes this is called a "ride along" provision when both spouses maintain an ownership in the business but only one spouse operates the business.

Closely Held Business interests

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Specialized Litigation

Protecting Your Life’s Work From Forced Liquidation.

We hire independent appraisers to distinguish between enterprise and personal goodwill, shielding your company’s value from inequitable division.

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30-Second Case Assessment

Step 1: Initial Assessment

Answer 6 targeted questions based on common Texas litigation patterns to identify high-conflict risks.

Why Tom Daley for Closely Held Business interests?

Inception of Title & Characterization

We determine if your business is separate or community property based on when it was formed and the source of its initial capital, protecting pre-marital assets from division.

Enterprise vs. Personal Goodwill

Texas law excludes 'personal goodwill' from the marital estate. We work with experts to separate your personal reputation from the company’s value, often significantly reducing the divisible estate.

Corporate Veil Protection

We defend against 'alter ego' claims where a spouse attempts to treat corporate assets as personal property. We ensure the business remains a distinct legal entity throughout the litigation.

Structured Buyout Agreements

To avoid a forced sale, we negotiate staggered payouts or asset offsets, allowing the managing spouse to retain 100% control of the business while fairly compensating the other party.

Forensic Commingling Analysis

If business funds were used for personal expenses, we perform a 'recapitulation' to untangle the finances, protecting the business from claims of community reimbursement or waste.