At some point in life, you probably had this discussion: is medicine a science or an art? The same question might be posed when it comes to valuing a spouse’s business interest in divorce.
Perhaps, as with medicine, the answer is that business valuation comes down to a combination of science and art.
At least one thing is certain, and that is this: if you ask a trial court to decide the value of a divorcing spouse’s business interest, the trier of fact—after considering the evidence presented by the lawyers and the experts—will be tasked with making the final call in answering “what is this worth”?
That brings us to the Judge Ronald Castorina Jr.’s recent decision of AP v. RP, 2025 NY Slip Op 52138(U) (Sup. Ct., Richmond Cty.).
In AP, the parties married in 2008, with one child of the marriage. The defendant owns a 25% interest in “AOC”, a construction company that builds laundromats. The defendant’s brother (CP) also owns 25%, and the remaining 50% of AOC is owned by the defendant’s father (RJP, Sr., referred to in the decision as “Senior”).
The court issued an order for an appraisal and current valuation of AOC to be performed by KLG Business Valuators and Forensic Accountants, LLC (“KLG”) as a neutral. KLG issued a report, which provides that the fair market value of the defendant’s 25% interest is worth $7,900.
The plaintiff in AP filed a motion seeking to have the court reject KLG’s valuation as it was “conducted based on limited documentation and without the participation of all business members, noting that RJP, Sr., who owns 50% of AOC, was not interviewed independently by the evaluators”. According to the plaintiff, “the absence of Senior’s input renders the valuation inherently incomplete and unreliable as to the true fair market value of the business”. The plaintiff also moved to amend the complaint to add Senior as a third-party defendant, however that aspect of the motion is not the subject of this article.
In response, the defendant argued that KLG stated it “was able to attain all information it required” without Senior’s participation from appropriate sources including “the accountant who had all intimate knowledge of the inner workings of the business”. Further, an email from KLG, which responded to inquiries regarding the “need for an interview with Senior”, read as follows: “we did not feel it was necessary to speak to the father as we received all of the information we required”.
The court’s analysis of plaintiff’s motion begins with several key tenets of matrimonial law in the context of business valuation. For this author, the court’s recitation of these fundamental principles of law are invaluable tools for divorce lawyers in that they can help you field questions from clients—monied spouses and non-monied spouses alike—about what lies ahead in a contested divorce proceeding where business valuation is in the cards.
These principles include:
1. “There is no uniform rule for valuing a business for purposes of equitable distribution and valuation is a matter within the fact-finding power of the trial court, guided by expert testimony”. That is a critically important statement. Indeed, while there will be arguments for, and against, using a “date of commencement” or “date of trial” valuation of a business interest, a one-size-fits-all approach to business valuation is shortsighted because each divorce case stands on its own facts.
2. “The valuation of a marital asset must be founded in economic reality”. This is another important point, whether you are representing the monied spouse or the non-monied spouse. How we define “economic reality” will depend on the facts of each case.
3. “The determination of the factfinder as to the value of a business, if within the range of the testimony presented, will be accorded deference on appeal if it rests primarily on the credibility of expert witnesses and their valuation techniques” (emphasis added). I regularly tell clients that credibility is everything; even with a strong case on the merits, showing your authentic self as being trustworthy and reliable on the witness stand is indispensable to a successful outcome. This mantra applies not just to divorcing spouses, but to the experts they retain as well; their credibility is at stake too in a matrimonial trial.
Returning to the decision itself, the Court denied the motion to reject KLG’s report because “KLG has stated that it was able to attain all information it required”, and in “direct response to counsel’s query of whether KLG has been able to communicate with Senior … KLG replied verbatim, ‘As mentioned on our zoom, we did not feel it was necessary to speak to the father as we received all of the information we required’”.
Coming full circle, the court, which has material discretion on matters of business valuation, deferred to KLG’s expert opinion “that an interview with Senior was unnecessary to their evaluation”.
It is easy—in fact, very easy—to get lost in translation when listening to a continuing legal education (CLE) program on business valuation in divorce.
Whether you are a divorce lawyer or an expert, if you are contemplating a future CLE on business valuation in divorce, please read the AP decision in advance as it explains basic tenets of business valuation in layman’s terms, i.e., it actually makes sense.
While that may seem elemental, I have sat through countless CLEs that try to dissect the “excess earnings method”, “reasonable compensation”, “discounted cash flow” and other complicated valuation techniques. Yet, I do not think any of those CLEs left me with tools that I could use to get clients (who are not divorce lawyers or business valuation experts) up to speed in a user friendly fashion on what it means to value a business interest in divorce. In contrast, the AP decision, to its credit, is enlightening in its simplicity and usefulness.
"Business Valuation in Divorce: Judicial Discretion Reigns," by Alan Feigenbaum was published in the New York Law Journal on May 19, 2026. Reprinted with permission.