How Florida Courts Value a Closely Held Business in a Divorce
If you or your spouse owns a business that is not publicly traded, you are facing one of the most complicated financial questions that can arise in a Florida divorce. Closely held businesses, including family businesses, professional practices, and small corporations, do not have a share price you can simply look up online. So how does a Florida court figure out what the business is worth, and what share of that value belongs to the marital estate?
Why Business Valuation Is So Contested
The stakes are high. A closely held business is often the most valuable asset a couple owns, sometimes worth more than the marital home. At the same time, its value is genuinely difficult to pin down, and two qualified experts looking at the same company can arrive at dramatically different numbers. That gap matters enormously when a court is deciding how to divide assets equitably under Florida law.
Florida follows the principle of equitable distribution, meaning marital assets are divided fairly, though not necessarily 50/50. Under Florida Statute 61.075, the court must identify, value, and distribute all marital assets and liabilities. A business or business interest that was built or grown during the marriage is generally treated as a marital asset subject to that process.
How Courts Approach the Valuation
Florida courts do not use a single mandatory method for valuing a closely held business. Instead, judges consider expert testimony and weigh the evidence presented by both sides. The most commonly used valuation approaches in Florida divorce proceedings include:
- The income approach, which estimates value based on the business’s earning capacity and projected future cash flow
- The market approach, which compares the business to similar companies that have sold recently
- The asset approach, which calculates the net value of the company’s tangible and intangible assets
Each method can yield a different result, and the choice of method often becomes its own battleground in litigation. The court has discretion in deciding which approach, or which combination of approaches, best reflects the true value of the business.
The Problem of Personal Goodwill
One of the most important and frequently disputed issues in Florida business valuation cases is the distinction between enterprise goodwill and personal goodwill. Enterprise goodwill refers to the value of a business that would survive even if the owner left, such as an established client base, a recognized brand, or proprietary systems. Personal goodwill is tied to the reputation, skills, or relationships of the individual owner and would not transfer to a new owner.
Florida courts generally treat enterprise goodwill as a marital asset and personal goodwill as the separate property of the owner spouse. Drawing that line is rarely simple, particularly for professional practices like medical or dental offices where the owner’s personal reputation drives revenue.
Reach Out to a Florida Divorce Attorney
If a business is part of your divorce, the outcome of the valuation process can have a lasting impact on your financial future. At Schwartz | White, we encourage anyone navigating this issue to seek qualified legal guidance as early as possible. Our Boca Raton complex divorce attorneys understand the financial and legal complexity these cases involve. Contact us today to schedule a confidential consultation and learn how we can help protect your interests.
Source:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0061-0079/0061/Sections/0061.075.html
