A founder in Lausanne opens an email from their spouse's lawyer requesting a valuation of the company. The latest tax return values the business at CHF 400,000, yet a buyer offered CHF 2 million just months earlier. Which figure matters, and which one will the court use?
This is a common source of confusion in business valuation in divorce. The tax value of a company rarely matches its market value, and using the wrong figure can significantly affect the financial settlement.
In Switzerland, business valuation in divorce determines the market value of a company for the division of marital assets. Under Article 211 of the Swiss Civil Code (CC), acquired property is generally valued at its market value on the date the divorce judgment is issued rather than the date of separation.
What Is Business Valuation in Divorce?
Business valuation in divorce means putting a fair market price on a company. That price then feeds into the division of marital property.
Why does it matter so much? A business is often the largest asset a couple owns. Unlike a bank account, it has no obvious number attached to it. Two experts can look at the same company and reach very different values. The method they choose drives the result.
Here it helps to know who does what:
A fiduciary or valuation expert, such as Fiduciaire Vaudoise, calculates the number. They analyse the accounts and apply a valuation method.
A lawyer argues over that number in the property settlement. They also decide how the value gets divided. You usually need both. The fiduciary builds the value. The lawyer defends it.
Does Your Spouse Have a Claim to Your Business?
Before calculating the value of a company, you first need to answer a more important question: Does your spouse have a legal claim to the business?
In Switzerland, the answer depends on your matrimonial property regime. Unless you have signed a marriage contract, the default regime is participation in acquired property under Article 181 of the Swiss Civil Code (CC). Most married couples fall under this regime automatically.
Under this system, each spouse owns two categories of assets:
Own property, such as assets owned before marriage or received by inheritance or gift.
Acquired property, which generally includes assets and wealth accumulated during the marriage.
Only acquired property is shared when the marriage ends.
For a business valuation for divorce, the treatment of the company depends on when and how it was acquired. A business started or purchased during the marriage is generally considered acquired property, meaning its value may be included in the marital estate. If the business existed before the marriage, it usually remains the owner's separate property. However, any increase in value generated during the marriage, or profits earned during that period, may still be subject to division.
In most cases, the non-owner spouse does not become a shareholder or co-owner of the business. Instead, they receive a financial compensation claim representing their share of the company's value. This is why obtaining an accurate business valuation is one of the most important steps in a Swiss divorce involving a privately held company.
How Does Business Valuation Work in a Divorce?
A business valuation in divorce depends on three key factors: the valuation date, the standard of value, and the valuation process.
Valuation Date
Swiss law uses two different dates, and understanding the distinction is important.
The first determines which assets belong to the marital estate. Under Article 204(2) of the Swiss Civil Code, assets and debts acquired between the date of marriage and the filing of the divorce petition are included.
The second determines when those assets are valued. In most cases, the company is valued on the date the court issues the divorce judgment or when the property settlement is finalized.
Because the valuation happens later, a business may increase or decrease in value during the divorce proceedings. Courts are aware of this and carefully examine any significant changes to ensure neither spouse intentionally manipulates the company's value.
Standard of Value
Swiss courts generally use market value when valuing a business in divorce proceedings. This represents the price that a willing buyer would pay a willing seller under normal market conditions.
Market value is not the same as book value or tax value. Instead, it reflects the company's actual economic value as a going concern.
Valuation Process
When spouses disagree about the company's value, the divorce court may appoint an independent valuation expert.
The expert prepares the valuation report, but the judge decides which valuation standard and methodology should be applied. Either spouse may also submit an independent valuation to support their position if they disagree with the court-appointed expert.
There is no single method for business valuation in divorce. The most appropriate approach depends on the company's size, industry, and financial characteristics.
1. Practitioner Method
The Practitioner Method is one of the most widely used approaches in Switzerland. It combines the company's earnings value and net asset value using the following formula:
Formula
Enterprise value = (2 × earnings value + 1 × net asset value) ÷ 3
Because earnings receive twice the weighting of assets, this method balances profitability with the company's underlying financial position. It is commonly used for established Swiss SMEs.
2. Earnings Value Method
The Earnings Value Method estimates a company's value based on its ability to generate sustainable profits.
Expected future earnings are capitalized using an appropriate discount rate to determine today's value. Since many owner-managed businesses report tax-optimized profits, financial statements often need to be normalized before applying this method.
3. Discounted Cash Flow (DCF)
The Discounted Cash Flow (DCF) Method values a business by forecasting its future cash flows and discounting them to their present value.
Because it focuses on future performance rather than historical results, DCF is often used for high-growth businesses with reliable financial projections.
4. Net Asset Value Method
The Net Asset Value Method measures what the business owns after deducting its liabilities.
It is most appropriate for asset-intensive companies, such as real estate or investment businesses, where tangible assets represent most of the company's value.
5. Market Multiples Method
The Market Multiples Method estimates value by comparing the business with similar companies that have been sold or are publicly traded.
This market-based approach provides a useful benchmark but depends on finding reliable comparable transactions, which can be difficult for privately owned SMEs.
How Do Swiss Courts Choose the Right Method?
There is no universal formula for business valuation in divorce cases. Swiss courts select the method that best reflects the company's economic reality.
For many established businesses, the Practitioner Method remains the preferred approach. However, companies with strong growth potential, significant intangible assets, or unique business models may require a different valuation method. Choosing the right approach is essential, as an inappropriate valuation can be challenged, and even overturned, during the divorce proceedings.
Why Tax Value Is Different from Divorce Value
Let's return to the Lausanne founder whose company was valued at CHF 400,000 for tax purposes but received a CHF 2 million acquisition offer.
The difference exists because tax value and divorce value serve different purposes.
Swiss tax authorities calculate the value of privately held companies to determine wealth tax, using standardized rules under Circular 28. This approach is designed for tax administration rather than estimating what a buyer would actually pay for the business.
A business valuation in divorce, however, aims to determine the company's fair market value. Valuation experts typically adjust the financial statements to reflect the business's true earning capacity by removing one-off transactions, personal expenses, and other non-operating items that can distort profits.
As a result, the market value used in a divorce settlement is often significantly higher, or sometimes lower, than the company's tax value.
The Key Takeaway
Never assume the value shown on your tax return is the value that will be used in a divorce. An independent business valuation is usually needed to determine the company's true market value.
How Goodwill Affects Business Valuation
Goodwill represents the value of a business beyond its tangible assets. It includes factors such as brand reputation, customer relationships, and the ability to generate future profits. For many service-based businesses, goodwill makes up a significant portion of the company's value.
In business valuation in divorce, however, not all goodwill is treated the same.
Swiss courts distinguish between business goodwill and personal goodwill. Business goodwill is transferable to a buyer and forms part of the company's market value. Personal goodwill is tied to the owner's individual skills, reputation, or relationships. Because it cannot usually be transferred, it is generally excluded from the valuation.
This distinction is particularly important for owner-managed businesses such as dental clinics, architectural firms, law firms, or medical practices. If clients work with the business primarily because of the owner's personal expertise, much of the earning capacity may disappear when the owner leaves. In that case, the company's transferable market value, and ultimately the divorce valuation, may be significantly lower
Factors That Affect Business Valuation
Before applying any valuation method, experts normalize the company's financial statements to reflect its true economic performance. The following factors commonly influence the final valuation.
1. Owner's Compensation
Many business owners pay themselves above or below market rates. Valuation experts adjust compensation to a reasonable salary so the company's sustainable earnings are not overstated or understated.
2. Retained Earnings
Retained profits increase shareholders' equity and often indicate a financially healthy business. Higher retained earnings can increase the company's overall value.
3. Shareholder Loans
Loans between the shareholder and the company must be properly classified. Outstanding balances can affect both the company's assets and liabilities, changing the final valuation.
4. Hidden Reserves
Swiss accounting rules may allow assets to be carried below their market value. Identifying these hidden reserves can increase the company's net asset value.
5. One-Off Income or Expenses
Extraordinary gains or losses, such as the sale of a building or a non-recurring legal settlement, do not reflect the company's ongoing performance. These items are removed to calculate sustainable earnings.
6. Quality of Financial Records
Reliable financial statements lead to more accurate valuations. Incomplete or inconsistent accounting records increase uncertainty, often resulting in valuation disputes and additional expert analysis.
Practical Examples of Business Valuation in Divorce
The following examples illustrate how the valuation method can significantly affect the outcome of a business valuation in divorce.
Example 1. Federal Supreme Court Case (BGE 5A_361/2022)
Business: Sole proprietorship operating an orthodontic practice.
Initial valuation: The lower courts applied the Practitioner Method and calculated:
Net asset value: CHF 0
Earnings value: Approximately CHF 3,066,877
Because the practice generated strong profits but had very few tangible assets, the valuation depended almost entirely on its earnings.
However, the courts recognized that most of those earnings came from the owner's personal expertise and relationships with patients. To reflect this, they reduced the weighting of the earnings value and valued the practice at approximately CHF 306,700.
The owner appealed, arguing that even this adjustment overstated the company's transferable value.
The Federal Supreme Court agreed, ruling that the Practitioner Method was not appropriate for a highly personal sole proprietorship because much of its earning capacity could not be transferred to a buyer. The decision reinforced an important principle: personal goodwill should not be treated as market value in a divorce valuation.
Example 2. Owner-Managed SME
Business: A trades company with three employees.
The company owns vehicles and equipment with a net asset value of CHF 200,000 and generates normalized annual profits of CHF 150,000.
Unlike a one-person professional practice, the business can continue operating even if the owner leaves. Its customers, employees, and operations are transferable, meaning both its assets and future earning capacity contribute to its market value.
In this situation, a mixed earnings-and-asset approach, such as the Practitioner Method, generally produces a fair and realistic valuation. The final value is typically higher than the company's net asset value alone because a buyer is acquiring an operating business rather than just its assets.
How Business Valuation Affects Spousal Maintenance
Valuation does not stop at property division. It can spill into maintenance.
There is a double-counting risk here. The same profits can be counted twice. First as company value in the property split. Then again as income for maintenance. Courts try to avoid charging an owner twice for the same francs.
A high valuation can also affect ability to pay. If you pay out a large sum for your spouse's share, your cash position drops. That can influence what maintenance you can afford. The two questions are linked, so they should be planned together, not in isolation.
How to Settle the Business Value Without Selling the Company
Most owners want to keep the business running. The good news: you rarely have to sell it.
The usual route is a buyout. You keep 100% of the company. You pay your spouse for their share in cash. This keeps the business intact and in your hands.
If cash is tight, other options exist. You can pay in instalments over time. You can offset the business share against another asset, such as the family home or pension assets. You can also refinance to raise the cash. The aim is to satisfy the claim without breaking up a working company.
What Has Changed in 2026?
The fundamental principles of business valuation in divorce remain unchanged. Swiss courts continue to value businesses at market value under Article 211 of the Swiss Civil Code (CC), and acquired property is generally valued at the date of the divorce judgment.
The most significant recent development is the growing influence of the Federal Supreme Court's decision in BGE 5A_361/2022. The ruling confirmed that personal goodwill, the value linked to an owner's personal skills, reputation, or client relationships, should not automatically be included in a company's market value. As a result, courts and valuation experts now pay closer attention to whether a business's earnings are transferable to a buyer before determining its value.
On the tax side, reform discussions are also underway. A parliamentary motion has asked the Federal Council to consider changes to the valuation of owner-managed businesses for wealth tax purposes, including placing greater emphasis on net asset value. While these proposals have not yet become law, they reflect an ongoing debate about how privately held businesses should be valued in Switzerland.
For business owners going through a divorce, the key takeaway is that recent court decisions place greater emphasis on the economic reality of the business rather than relying solely on standard valuation formulas.
What Documents Do You Need Before a Business Valuation?
Good documents mean a faster, cleaner valuation. Gather these before you start:
Annual financial statements for the last three to five years
The latest tax returns for you and the company
A current list of assets and liabilities
Details of any shareholder loans, in both directions
Salary and dividend records for the owner
Major contracts, leases, and client agreements
Any recent purchase offers for the business
Notes on one-off income or unusual costs
The stronger your paperwork, the harder it is for the other side to dispute the number.
Talk to a Swiss Fiduciary Before Agreeing on a Business Value
Never sign off on a business value based on the tax return alone. The gap between tax value and market value can cost you a fortune, in either direction.
A Swiss fiduciary can normalize your accounts and apply the right method.
A family-law lawyer can defend that number in the property settlement.
Together they make sure you neither overpay your spouse nor hand a court an inflated figure to divide.
If you are heading into a business valuation for divorce, get advice before you agree to anything. The right number, backed by the right method, is worth far more than the cost of the advice.
At Fiduciaire Vaudoise, our valuation specialists prepare independent business valuations using recognized Swiss methodologies and financial best practices. We normalize your financial statements, select the most appropriate valuation approach, and provide a well-supported valuation that reflects your company's true market value.
Need an Accurate Business Valuation for Your Divorce?
Contact Fiduciaire Vaudoise today to discuss your business valuation needs with our corporate finance experts.
