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Dividing a privately held business in a Florida divorce Dividing a privately held business in a Florida divorce

Dividing a privately held business in a Florida divorce

Florida gives business owners one of the country’s most consequential valuation rules, and everything in an owner’s divorce arranges itself around it: personal goodwill is not a marital asset. The value attributable to you personally, your skill, reputation, and relationships, stays out of the marital estate. What gets divided is enterprise value: what a buyer would pay for the company knowing you might walk away. Florida appellate courts have applied and policed that line for decades, beginning with Thompson v. Thompson, and the allocation between personal and enterprise goodwill is the central valuation fight in most Florida owner cases.

Can my spouse reach a business I owned before marriage?

Part of its growth, quite possibly. A premarital business is nonmarital property under F.S. 61.075, but Florida’s enhancement / active appreciation doctrine makes the appreciation caused by marital labor or marital funds a marital asset. Owners work in their companies, so an enhancement claim is nearly automatic; its size is the dispute. The analysis needs a supportable value at the date of marriage, a current value, and a causation story separating effort-driven growth from market-driven growth. The date-of-marriage value usually must be reconstructed from old tax returns, financial statements, and industry data, and the spouse with the better-supported starting number controls the size of the claim.

How is a business valued in a Florida divorce?

Through the standard income, market, and asset approaches, applied with Florida’s goodwill discipline. An earnings-based valuation must normalize owner compensation and perquisites, then separate the goodwill that would transfer to a buyer from the goodwill that walks out the door with the owner. A valuation that ignores the personal goodwill exclusion is vulnerable on its face in Florida, and out-of-state experts unfamiliar with the case law get dismantled on cross-examination. Retain Florida-fluent valuators. It matters here more than in most states.

Does the court have to sell the business?

No, and it almost never happens to a prepared owner. Florida cases resolve through offsets, the owner keeps the company, the other spouse receives assets of equivalent value, or structured buyouts over time with security. Co-ownership between former spouses is disfavored for the obvious reasons. Forced sale is typically the last resort when nothing else can fund an equitable distribution.

Owner income now does double work

After the 2023 alimony reform, the income finding drives support directly: durational alimony is capped at the lesser of reasonable need or 35 percent of the difference in net incomes. For owners, that converts the normalization of distributions, retained earnings, and perquisites into support arithmetic. Child support under F.S. 61.30 runs on the same income analysis. Expect the books to be examined, in both directions.

Straight answers.

Will my spouse get half my company in Florida?

Half the marital portion of its enterprise value, typically paid through offsets or a buyout rather than shares. Personal goodwill stays out of the estate.

Does a buy-sell agreement fix the value?

No. It is evidence the court may consider, but it does not bind the court, particularly when its formula departs from fair market value.

What records should I preserve?

Formation documents, capital history, five-plus years of returns and financial statements, general ledgers, K-1s and distributions, buy-sell and operating agreements, loan applications, and any prior valuations, especially ones prepared before anyone was divorcing.

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