What are the common methods for business valuation used in divorce?

The asset-based, income-based, and market-based approaches are established methods for valuing a business, especially in the context of divorce.

The asset-based approach focuses on the value of the business's tangible and intangible assets. This method is particularly useful when the business has considerable physical assets or if the value of the company's current operational capacity is heavily tied to its assets.

The income-based approach looks at the potential future earnings of the business. This method discounts projected income streams to present value and is valuable in determining how much the business is expected to earn over time, which can be critical for equitable distribution during a divorce.

The market-based approach involves comparing the business to similar companies that have recently been sold or valued in the market to determine its worth. This method draws on real-world data to help establish a fair market value based on comparable sales.

These approaches provide a comprehensive framework for valuing a business in a divorce context, ensuring all relevant factors are considered, including what each spouse contributed to the business and the business's potential for future growth or profitability.

The other methods listed in the alternative options do not align with the common practices for business valuation in divorce situations. Cost-based and performance-based methods are less prevalent in divorce contexts. Revenue-based