Attorney
When couples going through divorce sit down to talk about the value of a business, the conversation almost always starts with revenue. It’s the number on the top line, the one that feels most concrete: last year we brought in $1.2 million.
But revenue is only the visible part of the picture, the tip of the iceberg if you will. What actually determines how much a business is worth and whether it is on a sustainable trajectory is something that’s a bit harder to see: cash flow.
Cash flow is something you can only calculate by looking below the surface. As a business owner who was inspired to go to law school because of his own painful experiences with the divorce process, Bob Matteucci isn’t afraid to plumb the icy depths and retrieve the information you need to craft a settlement that reflects reality without putting a financial strain on both spouses (and the business their whole family depends on) once the divorce is final.
When he’s trying to get an accurate estimate of a business’s cash flow, Bob is looking at things like:
- The health of the business compared to competitors and the overall economy
- Seasonal income cycles
- Owner draws
- Debt service
Looking at these factors and thinking about how they shape a business’s cash flow gives you a more complete sense of a business’s value than revenue alone.
Temporary Downturns vs. Structural Decline
The economy as a whole is cyclical (growth, peak, recession, trough, repeat). Businesses in the Albuquerque area are not immune to downturns, nor are they stuck in a post-industrial trough.
Valuing a business during a divorce requires you to look at the bigger picture. Not every rough quarter signals a problem. A slow stretch tied to a one-time client loss, a delayed contract, or broader market conditions is different from a sustained decline in the business’s core earning power. On the other hand, not every economic boom is going to last forever.
A valuation that treats a lull as a warning sign, or applies a generic assumption about economic growth, is telling an incomplete story. A divorce settlement that relies on this information is going to be unfair at best. And in the worst cases, it will bankrupt the business and the family members who depend on it when cash flow can’t keep up with the strain a divorce puts on it. This is also true when you look at seasonal income, owner draws, and debt service.
Seasonal Income Isn’t the Same as Inconsistent Income
Many Albuquerque-area businesses (like those in the hospitality sector, but also contractors and retailers) see cash flow that rises and falls with the calendar.
Right now, Balloon Fiesta is bringing thousands of folks into Albuquerque. This winter, the RV parks will fill up as snowbirds come south for the season. In the spring, contractors will rush to finish outside work so they can spend more time doing finishing work indoors during the summer. Things always change from month to month, but a healthy business should grow or at least maintain the status quo year after year.
Owner Draws Complicate the Picture
Owner compensation is another factor that can obscure how much a business is generating or has on hand at any given time. Draws, distributions, and reimbursed personal expenses run through many small businesses in ways that blend the owner’s personal finances with the company’s. Sorting out what’s genuinely a business expense versus personal benefit is essential to understanding what the business actually generates.
Debt Service Changes the Math
A business carrying a loan for equipment, a buildout, or working capital may look profitable before debt payments and far less so after. Any valuation that ignores those payments risks overstating what the business can realistically support post-divorce.
Why Documentation and Expert Review Matter
None of this can be sorted out by memory or general impression. Bank statements, profit-and-loss reports, tax returns, and accounts receivable and payable records all tell part of the story, and they need to be reviewed together, not in isolation. This is where bringing in a business valuation professional — and an attorney like Bob who can keep an eye on them — becomes essential.
Serving Families with Dignity & Compassion
For business owning couples who want to move forward efficiently and fairly, analyzing cash flow is a critical part of divorce. It makes settlement easier, is a critical part of child support calculations, and prevents a divorce from putting an otherwise healthy business on the fast track to failure.
Bob Matteucci brings a rare combination to this work: an MBA from Tulane alongside his law degree, real experience owning a small business himself, and years spent helping Albuquerque couples navigate exactly this kind of financial complexity. If you’re facing a divorce involving a business or professional practice, Bob is here for you. Please contact him today to set up a meeting.