The Ohio Executive's Divorce Playbook: A Step-by-Step Guide to Valuing and Protecting Your Business

For a business owner or executive in Ohio, divorce is not just a personal crisis. It’s an existential threat.

The business you’ve built from scratch—the one that consumed your late nights, your personal capital, and your best ideas—is suddenly at risk. Your mind is likely racing with overwhelming questions:

• "Is my spouse entitled to half of my business?"

• "Will a judge who knows nothing about my industry force me to sell?"

• "How can I protect my legacy and my financial future?"

This fear is all-consuming. It leaves you feeling confused, uncertain, and deeply vulnerable. You're a decisive leader in your field, yet you feel paralyzed by a complex legal system that seems designed to process cases quickly, not to ensure a fair outcome for you.

It’s normal to feel this way. But divorce is overwhelming, and you don’t have to face it alone.

At Fogelman Law Firm, we are divorce lawyers who simplify the legal process so you can move forward with clarity, control, and financial security. We’ve guided many Ohio business owners through this exact scenario. We understand that a fair outcome isn’t a matter of luck; it’s the result of a clear, strategic plan.

This guide is your first step. We will walk you through the business valuation and protection process, step by step, so you can make the right decisions with confidence.

The Foundation: Is Your Business "Marital" or "Separate" Property?

The very first fear we must address is the "50/50 split." The good news is that this is largely a myth. Your spouse is not automatically entitled to half of your business. They are entitled to an equitable share of the marital portion of the business.

Understanding the difference between "marital" and "separate" property is the single most important concept in protecting your assets.

What is Separate Property in Ohio?

Under Ohio law, "separate property" is yours and yours alone. It is not subject to division in a divorce. It generally includes:

• Assets owned before the marriage. If you started your business, even as a sole proprietorship, before your wedding day, its value at that time is your separate property.

• Inheritances. Any money or property you inherited, even during the marriage, as long as it was kept in your name only.

• Gifts. Any gifts made specifically to you (e.g., from your parents) and kept separate.

• Passive Appreciation. This is a critical concept. If your separate property (like a pre-marital business) increased in value without any active effort from you or your spouse, that appreciation is also separate.

What is Marital Property in Ohio?

"Marital property" is the wealth you and your spouse created during the marriage, regardless of whose name is on the account. This includes:

• Any business started during the marriage.

• All income earned and assets purchased during the marriage.

• Active Appreciation. This is the million-dollar question for business owners. "Active appreciation" is the increase in your business's value that resulted from the active efforts, labor, or management of either spouse during the marriage.

Here is the challenge: If you owned your business before the marriage, but you actively managed it during the marriage (which, of course, you did), a large portion of its growth is marital. The court will see the marriage as a partnership. Your spouse’s contribution—whether as a co-owner, an employee, or as a homemaker who managed the family, enabling you to work—is seen as supporting that growth.

This is why you must read our detailed guide.

The "Commingling" Trap

The line between separate and marital property can be erased by "commingling."

• Example 1: You inherit $100,000 (separate property) and deposit it into your joint checking account. You then use that joint account for groceries, vacations, and business expenses. You have commingled the funds, and it may be impossible to trace your original $100,000. It is now likely marital.

• Example 2: You use marital funds (from your joint account) to pay for a new piece of equipment for your "separate" pre-marital business. You have just infused marital property into your separate asset, making a portion of it marital.

To protect separate property, you must be able to trace its origins and its separation from marital funds with meticulous documentation. This requires a forensic accountant and a skilled legal team.

Why "50/50" is a Myth: Ohio's Equitable Distribution Law

Ohio is an "equal or equitable distribution" state. This does require strictly "equal."

A judge will start with a presumption that a 50/50 split is fair, but the law permits courts to consider many factors before making a final decision. 

Your attorney's job is to help explain your options and then to develop a strong case showing that an arbitrary 50/50 split of the business would be inequitable—that it would destroy the asset's value, harm employees, or fail to recognize the separate property you brought into the marriage.

A Step-by-Step Guide to the Business Valuation Process

You cannot negotiate a fair settlement until you have a clear, defensible, and accurate number.

The greatest failure you can experience in this process is to be unprepared. If you don't have your own valuation, you will be forced to defend against your spouse's valuation—a number their expert calculated to be as high as possible. You will be playing defense from day one.

Success begins with taking control of the narrative. You must be the one to present a credible, thorough, and professional valuation. This is your plan.

Step 1: Assemble Your Experienced Team (Before You Need Them)

Your first call should be to a divorce attorney who can bring substantial experience with high-asset or financially complex cases to the table - the more they have seen and experienced, the more they can likely help. Your second call, at your attorney's direction, should be to a forensic accountant and/or a certified business appraiser.

Your company's long-time CPA is not the right person for this job. Your CPA's goal is to minimize your tax liability, which often means minimizing your company's on-paper income and value. A forensic accountant's job is to find the true, fair market value for a court.

This expert is crucial. They will analyze the books, defend the valuation in a deposition, and, most importantly, help your attorney trace the line between marital and separate property. We have a large stable of seasoned expert witnesses with whom we have worked before on financially complicated cases.

Step 2: Determine the "Valuation Date"

This is a critical point of legal strategy. Is the business valued on:

• The date of your separation?

• The date you filed for divorce?

• The date of your final trial?

• Or, another point in time that is advantageous for you under your particular circumstances?

This date can swing the value by hundreds of thousands of dollars. For example, if you had a record-breaking year after your spouse filed, your attorney will fight for an earlier valuation date. If the business has struggled, your attorney may argue for a more recent date.

Step 3: Understand the Three Methods of Valuation

Your forensic expert won't just "pick a number." They will analyze the business oftentimes using one of three methodologies:

1. The Asset Approach

• What it is: This method calculates the net value of all your tangible and intangible assets (equipment, real estate, cash, accounts receivable) minus your liabilities (debt, accounts payable).

• When it's used: This is common for holding companies (that primarily own real estate) or businesses that carry substantial cash or assets with consistent income and expenses. 

2. The Market Approach

• What it is: This is like a real estate appraisal. The expert looks for "comparable sales"—businesses of a similar size, industry, and location that have recently sold.

• When it's used: This is effective for common businesses like franchises (e.g., a dental practice, a McDonald's). Its weakness is that your business is unique, and true "comps" can be hard to find.

3. The Income Approach

• What it is: This is the most complex and often the most important method for a profitable, ongoing business. It determines the value based on the future income the business is expected to generate and there is an entire class of cases where this can significantly impact the overall cash value of the divorce settlement.

• How it works: The expert will often use one of two methods:

• Capitalization of Earnings: This method is used for stable businesses with a predictable history. The expert determines the business's "true" annual earnings and applies a "capitalization rate" (a risk multiplier) to determine its value.

• Discounted Future Earnings: This is used for businesses with more variable income or high growth potential. The expert projects the business's income over the next 5-10 years and then discounts that future value back to a "present-day" number.

A comprehensive valuation will analyze all three methods and then combine them into a single, defensible report of value.

Step 4: Prepare for "Discovery" (The Document Gauntlet)

Once the process begins, you will have to provide a mountain of documents to your spouse's legal team. This is called "discovery." Getting trapped in a long, emotionally draining legal battle often happens here.

The way to win is to be organized. Your attorney and forensic expert will help you gather these documents, which can include:

• years of personal and business tax returns.

• years of business financial statements (Profit & Loss, Balance Sheets, Cash Flow Statements).

• All loan applications (these are critical, as they contain your own "statements of value" for the bank).

• Partnership agreements, shareholder agreements, or buy-sell agreements.

• Lists of all business assets, debts, and inventory.

• Bank and investment statements (personal and business).

Being prepared simplifies the process, builds credibility with the court, and saves you thousands of dollars in legal fees.

Beyond Valuation: Advanced Protection Strategies

Knowing your number is only half the battle. Now you have to negotiate a settlement that protects the business.

Strategy 1: The Buy-Sell Agreement

If you have partners, your first line of defense is your Shareholder or Buy-Sell Agreement. As we explore in our ebook on this topic, this legal document may contain a "divorce clause." This clause might state that a spouse is not allowed to become a shareholder and gives the company or the other partners the right to buy out their shares, often at a pre-determined price. This can be a powerful tool to keep your divorce from becoming your partners' problem.

Strategy 2: Creative Settlement Options

You do not have to sell your business. The goal is to "buy out" your spouse's marital share with other assets.

• Asset Offset: Your spouse keeps the marital home (with all its equity) and a larger share of the 401(k), and in exchange, you keep 100% of the business.

• Structured Buyout: You pay your spouse their share over time (e.g., a 5-year property settlement note). This protects your company's cash flow and prevents you from having to take on a massive bank loan.

Strategy 3: Avoiding the "Double-Dipping" Trap

This is a critical and common mistake in high-asset divorces. "Double-dipping" is when your spouse gets paid twice from the same asset.

• Dip 1: The future income of your business is used to calculate its value (the "Income Approach"). Your spouse gets half of that value in the property settlement.

• Dip 2: That same future income is also counted as your "income" for the purposes of calculating spousal support (alimony).

You are being forced to pay twice. As we warn in the related ebook, a skilled attorney must ensure your settlement agreement has specific language to prevent this.

Your Path Forward: From Confusion to Clarity and Control

The path to failure is clear: You are unprepared. You let your spouse's expert define the value of your legacy. You can't trace your separate property. You get trapped in a long, expensive legal battle and end up negotiating from a position of weakness, likely choosing between selling (losing) your business or taking on crippling debt.

The path to success is the one we've outlined here. It starts with a plan. You work with experts. You get a clear, defensible valuation. You understand the line between marital and separate property. You negotiate a creative settlement from a position of strength, securing your lifestyle, your assets, and your company's future.

This guide is your foundation. But protecting your business involves more than just valuation—it involves avoiding critical mistakes and structuring a settlement that lets you move forward with financial security.

We've outlined the entire strategy in our free guide for executives and business owners.

Download Your Free Guide

To learn the critical mistakes to avoid and the creative settlement strategies to secure your company's future.

If you are ready to choose a better path forward for you and your family, take the first step. Schedule a confidential consultation with The Fogelman Law Firm, and let us show you how to navigate your divorce with the dignity you all deserve.