Divorce for Florida Business Owners — Closely Held Companies, Valuation and Buyouts

The short answer

A business acquired or built during the marriage is a marital asset under section 61.075 regardless of whose name is on the entity or who ran it. A business owned before the marriage stays non-marital, but the increase in its value during the marriage is marital to the extent it came from marital funds or either spouse's work. Almost every contested case turns on a valuation.

How a closely held business gets valued

Valuation experts generally work from three approaches and weight them to the business in front of them:

• Income approach — capitalizing normalized earnings or discounting projected cash flow. Most common for profitable operating companies.
• Market approach — comparing sales of similar businesses or applying industry multiples. Useful where real comparable transactions exist.
• Asset approach — net value of assets less liabilities. Common for holding companies, real estate entities and businesses that are not producing meaningful profit.

Personal goodwill versus enterprise goodwill

This distinction decides a large share of professional practice cases in Florida. Enterprise goodwill belongs to the business itself — its name, location, systems, staff, contracts and recurring customers — and is a marital asset that can be divided. Personal goodwill is tied to an individual's own reputation, skill and relationships, would walk out the door with them, and is not a divisible marital asset. Valuing a medical, legal, dental or accounting practice usually means separating the two, and the presence or absence of an enforceable non-compete affects the analysis.

What income the business really produces

Support is calculated on income, and an owner's tax return is a starting point rather than an answer. Courts look at the whole picture: salary and distributions, retained earnings and whether retention is a genuine business need, personal expenses run through the company such as vehicles, phones, travel, meals and insurance, related-party transactions, and any change in compensation patterns that happens to coincide with the filing. Where reported income does not match the standard of living, Florida courts can impute income.

Valuation date, and why it is fought over

Section 61.075 lets the court pick the valuation date it finds just and equitable, and it does not have to be the same date for every asset. In a business case that choice can move the number substantially — a company valued at filing may look very different a year later. Where value has changed because of one spouse's post-filing work, that argument gets made; where it changed because of the market, a different one does.

Dividing without breaking the business

Florida courts rarely force co-ownership on divorcing spouses, and section 61.075 specifically allows a court to consider the desirability of keeping a business intact and free from interference by the other party. The usual outcomes are a buyout of the non-owner spouse's marital share, an offset against other assets such as the home or retirement accounts, a structured payment over time secured by a note, or, where nothing else works, a sale.

Partners, operating agreements and third parties

When the business has other owners, their agreements matter. Shareholder and operating agreements often restrict transfers, contain buy-sell terms and set a valuation method. A divorce court cannot rewrite a third party's contract, and partners are entitled to protection from having a spouse forced on them as a co-owner. Those documents should be produced and read early, because they frequently dictate the shape of the settlement.

Running the business while the case is pending

Many Florida circuits enter a standing or administrative order at filing restricting the dissipation or transfer of assets outside the ordinary course of business. Owners should keep operating normally, keep clean records, avoid unusual distributions or new debt, and avoid moving money in ways that will need explaining. A payroll change, a sudden large expense or a new entity opened after filing will be found, and will be read in the worst available light.

Employing the other spouse

Where the other spouse works in the business, their role, compensation and access have to be handled carefully. Abruptly firing them or cutting off access after filing is a common and expensive mistake, and can support claims of dissipation or bad faith. Where a separation is genuinely necessary for the business, it is far safer done through the case, on the record.