In most cases, dividing a business in a Florida divorce is more complex than dividing a house, bank account, retirement account, or car.
Why? A business is not just an asset; it can also be a spouse’s job, source of income, future earning capacity, professional identity, or family legacy. The business-owning spouse will think, “This is my company. My spouse should not get part of it.” Meanwhile, the other spouse will think, “That business grew during our marriage. I should receive my share.”
However, Florida divorce courts do not just divide every business in half. First, courts determine whether the business, or some portion of the business, is marital property. Then, courts must determine the value of that marital interest. Finally, Florida courts decide how to distribute that value between the spouses equitably.
A Florida court must identify the business interest, value it, and distribute it practically. In Garrison v. Garrison, the trial court found the husband’s business was a marital asset and awarded each spouse a fifty percent ownership interest; it declined to assign the business a value. 255 So. 3d 877, 878 (Fla. 4th DCA 2018). Yet, the Fourth District reversed, holding the trial court must value the business, award it to one party, and create a distribution plan that was “practical and beneficial to both parties.” Id.
A business may cause several issues in a Florida divorce. Was the business created before or during the marriage? Did the business increase in value during the marriage? Did marital money help fund the business? Did one spouse work in the business while the other spouse managed the household? Does the business have goodwill, and is that goodwill attached to the business itself or only to the personal reputation of the owner? Is the business’s tax return an accurate picture of the money available to the owner?
Because Florida is an equitable distribution state, these questions matter. A Florida court begins with the premise that marital assets and liabilities should be divided equally, unless there is a legally sufficient reason for an unequal distribution. Fla. Stat. § 61.075(1).
When a divorce involves a closely held business, Florida law provides specific instructions: the court must value the marital interests in a closely held business using fair market value. Fla. Stat. § 61.075(6)(a)1.f.(I). Additionally, Florida law states that enterprise goodwill, when separate and distinct from the continued presence and reputation of the owner, is a marital asset that needs to be valued by the court. Fla. Stat. § 61.075(6)(a)1.f.(II). Therefore, a marital business must be classified, valued, and distributed under Florida’s equitable distribution statute.
In my experience, the real issue is determining what portion of the business is marital, what the business is truly worth, and how one spouse can receive a share of the value of the business without detrimentally hurting the business itself.
ARE BUSINESSES MARITAL PROPERTY IN A FLORIDA DIVORCE?
A business can be either marital property or nonmarital property in a Florida divorce. Sometimes, the business itself is nonmarital, but the increase in value of the business during the marriage is marital. In any Florida divorce involving a business, the first step is classification.
Florida law defines marital assets and liabilities to include “[a]ssets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them.” Fla. Stat. § 61.075(6)(a)1.a. Florida law also provides that “[a]ll assets acquired and liabilities incurred by either spouse subsequent to the date of the marriage and not specifically established as nonmarital assets or liabilities are presumed to be marital assets and liabilities.” Fla. Stat. § 61.075(8).
That presumption matters. If a spouse starts a business during the marriage, buys a business during the marriage, acquires shares during the marriage, or receives a business ownership interest during the marriage, that business interest is presumed to be marital. One spouse cannot avoid that presumption simply because the business is titled only in that spouse’s name.
Title is not marital classification. A spouse can own 100% of a company on paper while the company, or some portion of the company, still belongs in the marital estate.
A Florida divorce court looks beyond title. A Florida divorce court evaluates when the business interest was acquired, how the business interest was acquired, how the business was funded, how the business grew, and whether marital labor or marital money contributed to the business’s value.
Florida law expressly includes as marital property “[t]he enhancement in value and appreciation of nonmarital assets resulting from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.” Fla. Stat. § 61.075(6)(a)1.b.
Therefore, a spouse may have owned a business before the marriage, making the premarital portion of the business nonmarital. However, if the business increased in value during the marriage because of either spouse’s work, management, labor, investment, or use of marital funds, that increase in value can be classified as marital.
For example, Husband may have owned a small landscaping company before the marriage. At the time of the marriage, the company owned a truck, some equipment, and had modest revenue. During the marriage, Husband works full time in the business while Wife handles the household and children. Marital funds are used to buy equipment, and the company becomes a much larger operation.
In that case, a Florida divorce court likely would need to determine the value of the business at the time of marriage and the value of the business at the relevant valuation date in the divorce. The marital estate may not include the entire business. The marital estate may include the marital increase in value.
The same analysis can apply to restaurants, medical offices, dental offices, real estate companies, family companies, construction companies, and other closely held businesses.
Florida law also states that “marital interests in a closely held business” are marital assets. Fla. Stat. § 61.075(6)(a)1.f. In my experience, divorce-related business valuation disputes usually involve closely held businesses because closely held businesses have no public stock price telling the spouses or the court what the business is worth.
To value a closely held business, a spouse will likely need expert testimony, financial records, forensic accounting, and other valuation analysis tools.
The non-owner spouse does not automatically receive stock, membership interests, voting rights, or control of the company simply because a business is considered marital. Florida divorce courts usually do not want to force divorced spouses to run a business together after the divorce. Instead, a Florida divorce court determines the marital value of the business interest and then awards that value through equitable distribution.
Florida courts also distinguish between a spouse’s ownership interest in a business and the individual assets owned by the business entity. In Nelson v. Nelson, the Second District explained that, generally, “a trial court cannot, in a dissolution proceeding, ‘adjudicate property rights of a non-party.’” 206 So. 3d 818, 821 (Fla. 2d DCA 2016) (quoting Barabas v. Barabas, 923 So. 2d 588, 590 (Fla. 5th DCA 2006)). Further, the court stated that courts have “disavowed the equitable distribution of assets held by nonparty corporations, limited liability companies, and partnerships.” Id. (citing Ehman v. Ehman, 156 So. 3d 7, 8 (Fla. 2d DCA 2014); Mathes v. Mathes, 91 So. 3d 207, 208 (Fla. 2d DCA 2012); Lassett v. Lassett, 768 So. 2d 472, 474 (Fla. 2d DCA 2000)). In other words, a Florida divorce court typically values and distributes the spouse’s business interest, not every separate asset owned by the company.
Careful step-by-step analysis is required to equitably allocate the value of a business in a Florida divorce. The first question is, “What portion of the business is marital?” Only after that question is answered can a Florida court decide what the marital interest is worth and how that value should be distributed.
WHAT IF THE BUSINESS WAS STARTED BEFORE THE MARRIAGE?
A business that existed before the marriage is not automatically divided in a Florida divorce. Florida law states that nonmarital assets include “[a]ssets acquired and liabilities incurred by either party prior to the marriage.” Fla. Stat. § 61.075(6)(b)1. Thus, if a spouse owned a business before the marriage, the original premarital business interest may be that spouse’s nonmarital property.
However, the analysis does not end there.
A premarital business can still have a marital component if the business increased in value during the marriage due to marital labor, marital funds, or the efforts of either spouse. Florida courts make a distinction between the nonmarital business interest and any marital enhancement in value. The premarital portion of the business may remain nonmarital, while the increase in value during the marriage may be marital if that increase was caused by marital efforts or marital funds.
In Turner v. Turner, the First District explained that “an equitable distribution determination should recognize the enhanced value of assets owned solely by one spouse prior to the marriage, insofar as the increase in value can be attributed to marital labor or funds, inflation, or market conditions.” 529 So. 2d 1138, 1141 (Fla. 1st DCA 1988). The First District further stated, “[t]he concept is not limited to a determination of the value of just those assets acquired during the marriage.” Id. For business owners, this principle is particularly important.
For example, Wife may have started a small bookstore three years before the marriage. When the parties married, the business had a small clientele and minimal operations. During the marriage, Wife worked full time at the bookstore, hired employees, created recurring revenue, and used marital funds to pay for payroll, more space, and more inventory. Twenty years later, the business is worth much more than it was on the date of marriage.
Wife potentially still has a nonmarital claim to the premarital value of the business. However, the increase in value during the marriage may be marital if that increase was due to marital labor, marital funds, or spouse’s efforts.
In a Florida premarital business case, these are the key questions: What was the business worth at the time of marriage? What is the business now worth? Did the business increase in value during the marriage? Did that increase actively or passively? Did marital funds help expand or support the business? Did either spouse’s labor contribute to said increase?
The spouse claiming a marital interest in a premarital asset generally must connect the appreciation to marital efforts, marital funds, or marital assets. In Oldham v. Oldham, the Fourth District explained that “absent a showing that either marital funds, assets, or the work efforts of one or both spouses contributed to the enhanced value of the asset, the appreciated value of one spouse’s nonmarital asset occurring during the marriage is not subject to equitable distribution.” 683 So. 2d 579, 580 (Fla. 4th DCA 1996). In that case, because the record demonstrated the husband maintained the land, paid property taxes, and made site improvements during the marriage, the court held that the appreciation should be equitably distributed. Id.
Similarly, in Jordan v. Jordan, the Fourth District affirmed that a once nonmarital asset became marital because the former wife helped coordinate and perform improvements to the former husband’s premarital chiropractic building. 127 So. 3d 794, 797-98 (Fla. 4th DCA 2013). The Fourth District also stated that the improvements “went beyond mere maintenance and were improvements that enhanced the value of the building.” Id. at 797. Those actions, “combined with how the proceeds from the sale of the building were used, sufficiently transformed the nonmarital asset into a marital asset.” Id.
I often see that passive appreciation and active appreciation are treated differently. If a premarital business increases in value due to market forces, inflation, or circumstances unrelated to marital funds or efforts, the owner spouse can argue that the appreciation stays nonmarital. Yet, if the business increases in value because the owner spouse worked in or improved on the business using marital funds, the other spouse can argue that some, or even all, of that increase is marital.
Under Florida law, direct and indirect contributions to the marriage are also recognized. In determining equitable distribution, a Florida divorce court may consider the contribution of each spouse to the marriage. This includes contributions for the care and education of the children and services as a homemaker. Fla. Stat. § 61.075(1)(a).
Put simply, the non-owner spouse does not always have to have worked directly in the business to have a claim to the business’s marital growth. A spouse who stayed home with children, managed the household, moved for the owner spouse’s career, or otherwise supported the family unit may still have made contributions relevant to equitable distribution.
In all, a premarital business is not automatically safe from division of value in a Florida divorce. However, a premarital business is also not automatically divided as though the whole company were marital. A business started before marriage is potentially nonmarital. The growth of the business during the marriage is potentially marital. Your divorce lawyer should be arguing both of those points as appropriate to your position.
DOES MY SPOUSE GET HALF OF MY BUSINESS IN A FLORIDA DIVORCE?
To be clear, your spouse is not going to automatically get half of your business in a Florida divorce.
Yes, Florida is an equitable distribution state, but equitable does not always mean equal. Rather, a Florida court begins with the presumption that the overall distribution of marital assets and liabilities should be equal, unless there is a justification for an unequal distribution. Fla. Stat. § 61.075(1). This distinction matters, as a spouse may be entitled to receive one-half of the marital value of a business, yet that does not mean the spouse receives one-half of the actual business.
As mentioned above, a Florida divorce court is typically not trying to force divorced people to become business partners. A business often needs daily management, employee and customer relationships, contracts, insurance, professional licenses, industry knowledge, and more. Giving both spouses ownership after a divorce can cause many problems.
Florida’s equitable distribution statute allows Florida divorce courts to consider “the desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.” Fla. Stat. § 61.075(1)(e).
Florida case law follows the same practical concern. In Menendez v. Rodriguez-Menendez, the Third District held that the trial court erred, as it equally distributed shares of a closely held business “without sufficient evidence as to value,” and then left the former spouses as joint owners. 871 So. 2d 951, 952 (Fla. 3d DCA 2004). The court explained that granting a former spouse a shared interest in the stock of a closely held corporation has the effect of “requiring the former spouses to operate as business partners,” and that “[s]uch a financial arrangement is intolerable.” Id. The parties were required to present proper valuation evidence so that the trial court could award the business to one spouse and “devise a plan of distribution which causes the least interference with the ongoing business of the corporation, yet which is practical and beneficial to both spouses.” Id.
In Manolakos v. Manolakos, the Fourth District addressed a divorce between two chiropractors who started Gold Coast Chiropractic Center as equal partners and took a fifty percent interest in Orange Blossom Chiropractic Center. 871 So. 2d 258, 259 (Fla. 4th DCA 2004). During trial, the court suggested the former spouses “remain co-owners of the chiropractic businesses and work together after three years,” yet both spouses rejected such a suggestion. Id. The final judgment still ordered the former spouses to “remain equal owners in the chiropractic businesses.” Id. at 260. The former husband would manage and operate the businesses for three years and receive all profits; after three years, the former wife would return to work and receive fifty percent of the net revenues. Id. The Fourth District reversed, stating: “Dissolution of marriage being what it is, it is clearly an abuse of discretion for the trial court to order two parties who have stated they do not want to continue to work together after their divorce to do just that.” Id.
The point is that a spouse can receive value from a business without receiving control of the business. For example, Wife may own and operate a company; the business is marital and has a marital value of $800,000. Husband does not want to run the company, and he could not realistically operate it after the divorce. In that case, a Florida court likely would not award Husband 50% of Wife’s company and expect them to run it together.
Rather, the court may award the business to Wife, then compensate Husband through the rest of the equitable distribution analysis. Husband could receive more of the marital home equity, more retirement assets, other marital property, or an equalizing payment.
In Florida, the court is allowed to order either a monetary payment in a lump sum or in installments. Fla. Stat. § 61.075(10)(a). When the court orders installment payments, the court may require security, interest, or another method of recognizing the time value of money. Fla. Stat. § 61.075(10)(b). This is why “half the business” is usually not the most accurate way to think about the issue. The better question is: What is the marital value of the business, and how will that value be distributed?
In a Florida divorce, a spouse can receive half of the marital value of the business without receiving half of the company. A spouse could receive less than half of the marital value. A spouse could receive more than half of the marital value. The only certainty is that a spouse will receive no part of the business if the business is entirely nonmarital and there was no marital appreciation.
A Florida court considers many factors when deciding whether equal distribution is fair. Those factors include “the contribution to the marriage by each spouse, economic circumstances of the parties, duration of the marriage, any interruption of personal careers or educational opportunities of either party, contribution of one spouse to the personal career or educational opportunity of the other spouse,” as well as “any other factor necessary to do equity between the parties.” Fla. Stat. § 61.075(1).
The value of a business may be impacted by many of those factors. One spouse may have worked long hours to build the company. The other spouse may have raised the children and maintained the home. One spouse may have used marital funds to expand the business. The other spouse may have signed personal guarantees for business debt. The Florida divorce court’s job is to identify, value, and distribute the marital estate in a way that accounts for all these possible factors.
I want to be clear: your spouse does not automatically get half of your Florida business in a divorce. However, if the business is marital, partly marital, or increased in value during the marriage because of marital efforts or marital funds, your spouse may have a claim to part of the business’s value. The dispute is often not over whether your spouse will sit in your office or manage your employees. It is usually over what the business is worth, how much of that value belongs to the marital estate, and how to distribute that marital value between the two spouses.
WHAT IS A CLOSELY HELD BUSINESS IN A FLORIDA DIVORCE?
Generally, a closely held business is a private business owned by a small number of people and not traded on a public market.
This is important in a Florida divorce because Florida law explicitly includes “marital interests in a closely held business” as marital assets when those interests are acquired or created during the marriage, or when a marital component exists. Fla. Stat. § 61.075(6)(a)1.f.
The key feature of a closely held business is that there is usually no public market price. A spouse who owns publicly traded stock can determine the value of that stock by looking at the market price on the relevant date. A closely held business is very different because there may be no recent sale, no outside buyer, and no comparable transaction. In my experience, the lack of clear value signals is why closely held businesses usually cause valuation disputes in Florida divorces.
The business owner will often argue the company does not have great value because the business depends on his or her labor, relationships, reputation, or involvement. Yet, the other spouse will say the business is worth much more as the company has employees, recurring customers, equipment, contracts, cash flow, etc. A Florida divorce court does not simply accept either spouse’s opinion. A Florida divorce court must determine the value of the marital interest based on competent evidence.
Therefore, a closely held business needs the court to answer three questions: What portion of the business is marital? What is the marital interest worth? How should that value be distributed without unnecessarily harming the business?
HOW ARE CLOSELY HELD BUSINESSES VALUED IN A FLORIDA DIVORCE?
Once a Florida court determines that a closely held business, or some portion of a closely held business, is marital, the next question is value.
Florida law gives courts a specific valuation standard for closely held businesses in divorce: “[t]he standard of value of a closely held business is fair market value.” Fla. Stat. § 61.075(6)(a)1.f.(I). Fair market value is “the price at which property would change hands between a willing and able buyer and a willing and able seller, with neither party under compulsion to buy or sell, and when both parties have reasonable knowledge of the relevant facts.” Fla. Stat. § 61.075(6)(a)1.f.(I).
This definition of “fair market value” matters because a business’s divorce value is not necessarily the number the owner spouse gives it, the book value on a balance sheet, the number on a tax return, or the amount in the company bank account. A Florida divorce court is required to decide fair market value based on competent, substantial evidence.
In Palmer v. Palmer, the former wife’s expert valued the former husband’s stock in a closely held family-owned corporation, explained the appropriate valuation methods, and chose the capitalization of earnings method. 316 So. 3d 411, 414-15 (Fla. 5th DCA 2021). The Fifth District noted that the expert “thoroughly explained the various acceptable methods in his profession for valuing a business and why he chose to use the ‘capitalization of earnings’ methodology in this case.” Id. at 414. The court affirmed because the trial court’s acceptance of the expert’s valuation was “well within its considerable discretion” and the stock values were “supported by competent substantial evidence.” Id. at 415.
Business valuation evidence is important. A business owner may know the business better than anyone but that does not necessarily make the owner spouse’s valuation completely reliable. The owner spouse may minimize the value. The non-owner spouse may inflate it. A valuation expert gives the court an opinion centered on accepted methodology, current financial records, and the verifiable facts about the business.
In Erp v. Erp, the Second District explained that business valuation decisions are “fact-intensive and usually heavily dependent upon the opinions of well-trained experts.” 976 So. 2d 1234, 1237-38 (Fla. 2d DCA 2008). The question is not whether a divorce trial court can use one valuation method over another but whether an expert may testify using a method the expert states is accepted in the profession. Id. Where the expert is permitted to testify, the trial court has discretion to decide how much of that testimony to accept or reject. Id.
A valuation expert may review general ledgers, tax returns, balance sheets, profit and loss statements, bank statements, payroll records, contracts, accounts receivable, accounts payable, and many other types of financial records.
Additionally, the expert may need to normalize the business’s income. A business may pay personal expenses for the owner or the owner’s family members. A business could retain earnings instead of distributing them. Further, a business may report low taxable income yet still provide enormous economic benefits to the owner. A business may have debt, receivables, goodwill, or other assets that do not clearly appear on a tax return. In my practice, this is where business valuation becomes contested. What the court truly needs is sophisticated expert testimony to make the appropriate determination.
A Florida divorce court must make written findings identifying and valuing marital assets in a contested dissolution action. Fla. Stat. § 61.075(3)(b). This is essential when a business is part of the marital estate because the business value impacts the whole equitable distribution scheme, including all the other marital assets the parties possess.
In a Florida divorce, a spouse must be careful before accepting a business value based simply on tax returns, guesses, or informal estimates. A closely held business may be worth less than the non-owner spouse believes. On the flip side, a business may be worth much more than the owner spouse wants to admit. The only way to truly know is to classify the business interest as potentially marital, obtain the appropriate, verified financial records, and then value the marital interest under Florida’s fair market value standard.
THE THREE COMMON BUSINESS VALUATION METHODS IN A FLORIDA DIVORCE
A closely held business usually cannot be valued by looking at only one number. Before a Florida divorce court can distribute a business interest, the court needs competent evidence of value.
Proper valuation matters because the value of the business affects the entire equitable distribution scheme. In Soria v. Soria, the Second District held that a trial court’s valuation of marital assets must be supported by competent, substantial evidence. 237 So. 3d 454, 458 (Fla. 2d DCA 2018). The Second District explained that “[p]roper valuations of assets are critical to the propriety of an equitable distribution scheme.” Id. The Second District further explained that “[t]he valuation of a business is calculated by determining the fair market value of the business,” meaning the amount a willing buyer and willing seller would exchange for the business absent duress. Id. In Soria, the Second District reversed because the arbitrary par value assigned to the company’s stock “bears no relation to ABC’s fair market value,” and the trial court failed to consider the company’s assets and liabilities. Id. at 458-59.
In my experience, most business valuation experts consider three general valuation methods: the income approach, the market approach, and the asset approach. The method used depends on the quality of records, the company’s earnings history, whether the business owns meaningful tangible assets, the nature of the business, and the existence of comparable sales.
In King v. King, competing experts valued an insurance agency through different approaches. One expert “assign[ed] percentage weights to two approaches for establishing the value of a business: the market approach and the income approach,” while the other expert used the income approach. 313 So. 3d 887, 890 (Fla. 1st DCA 2021). This case illustrates why valuation methodology matters: the selected approach may dramatically change the business value.
The Income Approach
The income approach values a business based on its ability to produce income or cash flow, which is helpful when a business has predictable cash flow, consistent earnings, recurring revenue, and just an all-around reliable history of profitability. A valuation expert can look at past earnings, normalize income, and decide reasonable compensation. Then, the expert can use a capitalization rate or discount rate to convert expected future income into present value.
I see this approach used in cases with companies like professional practices, operating companies, and service businesses. For instance, a consulting company may not own significant equipment or inventory; however, it may still have substantial value if it produces reliable cash flow every year.
The income approach can create disputes. The owner spouse may claim that future income is uncertain or that past earnings do not predict future earnings. The non-owner spouse may claim that the business has stable revenue or that future income is likely. Thus, the expert’s assumptions matter virtually as much as the final number.
The Market Approach
The market approach values a business by comparing it to similar businesses that have been sold. When reliable, comparable sales exist, an expert will evaluate sale prices, industry data, and the similarities or differences between the comparable businesses and the business being valued.
The problem with this approach is that closely held businesses are often unique. A small family-owned restaurant may not have perfect comparables, so even if similar businesses have sold, the expert may have to adjust for different factors. These factors may include assets, debt, size, location, customer concentration, profitability, and owner involvement.
The Asset Approach
The asset approach values a business by looking at its assets and liabilities. Unsurprisingly, this approach can be useful for asset-heavy businesses, as well as holding companies, real estate businesses, or companies with weak or inconsistent earnings. An expert identifies the business’s assets, adjusts those assets to fair market value, subtracts liabilities, and finally determines the net value of the company.
Florida courts need enough evidence to understand what the business is worth and what liabilities come with the business. In Dyson v. Dyson, the First District reversed because the record did “not contain evidentiary support” for the trial court’s $5,000 valuation of the wife’s interest in a jointly owned cabinet business. 597 So. 2d 320, 326 (Fla. 1st DCA 1992). The court emphasized that business debts, such as loans and taxes, had to be treated as liabilities in valuing the parties’ interests in the business. Id.
In Florida, a business valuation cannot count only the favorable pieces of the company. In Bair v. Bair, the Second District held that the trial court erred as a matter of law because it failed to include the value of real property owned by the company when valuing the business. 214 So. 3d 750, 754 (Fla. 2d DCA 2017). The court stated that “the value of any company comprises all the company’s assets and liabilities” and that excluding “major assets owned by [the company]” is “plain error.” Id. Further, it stated that “the sum of all parts, not a select few, is what encompasses a business’s ‘value.’” Id.
Not one valuation method is perfect in every case. For example, a profitable operating business certainly could be undervalued if the analysis evaluated only hard assets and ignored factors like earnings, contracts, customer relationships, or goodwill. Also, an asset-heavy business could be overvalued if the analysis ignored debt, loans, and/or contingent liabilities. The point is not to make every business follow the same formula. The point is to use a valuation method that truly fits the business and is supported by competent evidence.
BUSINESS VALUATION EXPERTS IN A FLORIDA DIVORCE
A spouse is allowed to have an opinion about what a business is worth. A business owner is also allowed to have an opinion about what the business is worth. However, in my experience, when it comes to a contested Florida divorce, a closely held business valuation needs more than opinion. A judge is not expected to become an accountant, and a valuation expert helps explain the financial reality of the business.
Who are business valuation experts? They may be certified valuation analysts, forensic accountants, certified public accountants, accredited business valuation professionals, or another professional with qualified experience.
I usually see that the expert’s final number matters in determining value, but the explanation behind that value matters even more to the Florida divorce court. A strong valuation report must explain what records were reviewed, what valuation date was used, and what method was selected. The valuation report also must show why that method was selected, what adjustments were made, whether discounts were applied, whether goodwill was included, and what assumptions drive the final value.
A weak valuation report provides a number without showing any work. A Florida divorce court needs a business value it can rely on.
The business valuation expert does not decide the case. The judge does. However, in a Florida divorce involving a closely held business, the expert usually provides the court with the financial foundation it needs to value the business interest appropriately.
WHAT FINANCIAL RECORDS ARE NEEDED TO VALUE A BUSINESS IN A FLORIDA DIVORCE?
In a Florida divorce, the business-owning spouse usually has better access to the company’s financial information than the other spouse. The business-owner understands how revenue is collected, which expenses are ordinary, which expenses are discretionary, whether the business has debt, and whether the business pays expenses that personally benefit the owner. Without discovery, the non-owner spouse usually cannot access the documents needed to test those claims.
Florida family law cases involve mandatory financial disclosure. Rule 12.285 of the Florida Family Law Rules of Procedure provides that “mandatory disclosure applies to all original and supplemental proceedings,” and the certificate of compliance identifies the documents exchanged between the parties. Fla. Fam. L. R. P. 12.285(a). In a business-owner divorce, mandatory disclosure is only the starting point. A meaningful business valuation typically requires more detailed business records.
The records needed to value a business can be extensive. Some records include profit and loss statements, balance sheets, bank statements, business and personal tax returns, K-1s, W-2s, 1099s, corporate records, operating agreements, shareholder agreements, credit card statements, payroll records, general ledgers, loan documents, accounts receivable, accounts payable, contracts, leases, insurance records, and other documents showing debt.
The value of a business is not always clear from the tax return. A company may report low taxable income but still have strong cash flow or provide substantial benefits to the owner spouse. Income is also not the only factor in determining a company’s value. A company may own real estate, inventory, equipment, receivables, or intellectual property. A company may also have debt, tax liabilities, lines of credit, contingent liabilities, uncollectible receivables, or deferred expenses.
Florida law recognizes that a business valuation must be based on fair market value and the company’s broader financial picture. In Busto v. Arias, the Third District explained, “[t]o value a business, the trial court must determine ‘the fair market value of the business,’” and that the court must “consider all the company’s assets and all its liabilities.” 406 So. 3d 1019, 1021 (Fla. 3d DCA 2025).
A business valuation expert may have to adjust the company’s financial statements before reaching an opinion; I see this a lot in my practice. These adjustments can include accounting for business debt, determining whether personal expenses were paid through the business, evaluating whether the business has goodwill, removing nonrecurring expenses, normalizing income, adjusting officer compensation, and examining related-party transactions.
In Busto, neither party gave an expert, so the trial court used a seller’s discretionary earnings method and added back the owner’s compensation to reach the business value; the Third District affirmed because the trial court “showed its calculations” and relied on “competent, substantial evidence in the record.” Id. at 1022. This case shows why profit and loss statements, owner compensation records, and valuation methodology often matter so much in a Florida divorce involving a closely held business.
In my experience, this is where business valuation disputes become extremely fact specific. For example, Husband may say that the tax return shows the business barely makes money. Wife may argue that the business pays Husband’s insurance, phone, car, travel, meals, and other personal expenses. In many cases, both statements can be true at the same time.
Additionally, reliable documentation matters because a Florida divorce court must make findings that are supported by evidence. In Tritschler v. Tritschler, the Second District reversed an equitable distribution scheme because the final judgment did not properly identify, value, and distribute the parties’ marital and nonmarital assets and liabilities. 273 So. 3d 1161, 1163-64 (Fla. 2d DCA 2019). The court held the trial court had to “ensure that its valuations are supported by evidence in the record” and needed to identify and value the parties’ marital assets and liabilities. Id. at 1164.
If there are no reliable records, then a Florida divorce court cannot fairly value a business. If the records are incomplete, inconsistent, or controlled solely by one spouse, then the valuation becomes more difficult and more expensive. The need for clarity is why business records should be requested early, evaluated thoughtfully, and compared against the lifestyle and financial claims of the business owner.
PERSONAL EXPENSES AND HIDDEN INCOME IN A FLORIDA BUSINESS DIVORCE
A business owner’s income is not always limited to the salary listed on a paystub. A business owner can receive a W-2 salary, K-1 income, or distributions. The business owner may retain earnings in the company or pay personal expenses through the business. The list goes on.
This does not mean every business deduction is improper. Businesses have real expenses, including rent, payroll, insurance, taxes, supplies, inventory, advertising, debt service, and equipment costs. A Florida divorce court cannot assume every business expense is fake or personal because ordinary, necessary business expenses matter when determining income for support.
However, a business may pay expenses that are personal to the owner spouse, including a company car, meals, travel, cell phones, insurance, or other lifestyle expenses. Those expenses can impact business valuation and support. Regarding valuation, a valuation expert may be required to add back discretionary or personal expenses when normalizing income. For support purposes, those expenses can show the owner spouse receives more economic benefit from the business than the tax return or paystub shows.
In Shouman v. Salama, the trial court found the former husband could not pay alimony since his financial affidavit showed a monthly deficit. 404 So. 3d 616, 618 (Fla. 6th DCA 2025). However, the Sixth District reversed, as the deducted expenses “are not being personally paid by Former Husband but are instead being paid by his business.” Id. The former husband’s financial affidavit stated, “[a]ll of the Husband’s expenses are being paid through the business,” so his monthly income, “from which he pays no expenses,” was surplus income available for alimony. Id.
I often see hidden income appear in less obvious ways. A business owner can leave money in the business, delay invoicing, use cash without reporting it, run personal purchases through business accounts, accelerate expenses, pay relatives, create loans to related entities, or manipulate inventory. Importantly, these issues do not prove themselves. They are more likely than not going to require bank statements, ledgers, credit card records, invoices, deposits, payroll records, and/or forensic accounting.
In my experience, an important question is not simply, “What income does the business report?” The optimal question is, “What economic benefit does the business provide to the owner?”
A spouse must not assume the business is worth a fortune simply because the owner seems to live well. Conversely, a spouse must not accept a low business value or low-income number merely because a tax return indicates as much. Financial records need to be tested against the actual money moving through the business.
GOODWILL, PERSONAL GOODWILL, AND ENTERPRISE GOODWILL IN A FLORIDA DIVORCE
A business in so many cases is worth more than its equipment, inventory, and bank accounts, as it has a name, location, systems, trained employees, recurring customers, patient lists, referral sources, contracts, or the ability to create future earnings. That extra value may be goodwill. Goodwill can be one of the most important issues in a Florida divorce that involves a closely held business.
Florida law expressly addresses goodwill in closely held business valuation. Where goodwill exists separate and distinct from the continued presence and reputation of the owner spouse, it is enterprise goodwill, which is a marital asset that must be valued by the court. Fla. Stat. § 61.075(6)(a)1.f.(II). Additionally, Florida law requires the court to consider evidence that a non-compete or similar restrictive covenant may be required upon sale of the business; however, that evidence alone does not stop the court from finding enterprise goodwill. Fla. Stat. § 61.075(6)(a)1.f.(III).
The difference between enterprise goodwill and personal goodwill matters. Enterprise goodwill belongs to the business, meaning it may exist due to customers returning to the company because of its brand, location, systems, staff, trained workforce, referral network, customer list, contracts, or continuing revenue. Personal goodwill belongs to the individual, meaning it is tied to the owner’s personal reputation, relationships, professional license, skills, or recurring presence.
Florida’s leading goodwill case is Thompson v. Thompson. In Thompson, the Florida Supreme Court stated that, “if it exists and if it was developed during the marriage, professional goodwill is a marital asset which should be included in the marital estate upon dissolution.” 576 So. 2d 267, 268-69 (Fla. 1991). However, the court also stated that goodwill, “to be a marital asset, must exist separate and apart from the reputation or continued presence of the marital litigant.” Id. at 270. Where “goodwill depends on the continued presence of a particular individual,” it is “not a marketable asset distinct from the individual.” Id. Any value that exists solely because of personal goodwill “represents nothing more than probable future earning capacity,” which may be relevant to alimony but is not properly divided as marital property. Id.
This rule is important in many professional practices. A medical practice, a dental practice, a law firm, an accounting firm, a consulting business, a chiropractic office, or a therapy practice can have both enterprise goodwill and personal goodwill. A business often has systems, staff, records, and recurring patients yet the success of the business also depends a lot on the owner’s personal reputation, continued work, or special skills.
In Young v. Young, the Fifth District reversed a goodwill award since there was a “complete absence of evidence of the existence of goodwill separate from reputation and tangible assets.” 600 So. 2d 1140, 1142 (Fla. 5th DCA 1992). The court explained, Thompson “does not require a finding of goodwill,” but rather provides that goodwill may be divided only “if there is evidence to support its existence apart from the reputation and presence of the practicing party and the tangible assets.” Id. Even if goodwill existed, the Fifth District nevertheless held that “neither expert gave competent, credible testimony as to the value of that goodwill.” Id. at 1142-43.
Similarly, in Schmidt v. Schmidt, the Fourth District stated that enterprise goodwill is the value of a business “which exceeds its tangible assets” and reflects “the tendency of clients/patients to return to and recommend the practice irrespective of the reputation of the individual practitioner.” 120 So. 3d 31, 33 (Fla. 4th DCA 2013). By contrast, personal or professional goodwill is “attributable to the skill, reputation, and continued participation of an individual” and “is not a marital asset.” Id. Additionally, the court explained that the need for a covenant not to compete is important because it “signals the existence of personal goodwill,” which is unable to be included in the business value for equitable distribution. Id. at 33-34.
Before accepting a business valuation, a spouse must understand whether the expert included goodwill or excluded goodwill. In fact, the expert may have even separated personal goodwill from enterprise goodwill. A valuation that treats all goodwill as enterprise goodwill can overstate the marital value, but a valuation that treats all goodwill as personal goodwill can understate that goodwill.
For example, Wife owns a dental practice. If patients return because of the practice’s location, hygienists, and records, the practice likely has enterprise goodwill. However, if patients return only because of Wife’s personal reputation and would leave if she stopped practicing, then some of the value is going to be classified as personal goodwill.
Put simply, goodwill is not simply an accounting concept. It can drastically impact the divisible value of a business in a Florida divorce.
Conclusion
A Florida divorce that involves a business requires much more than simply asking whose name is on the company documents. The court needs to decide whether the business is marital, nonmarital, or a mix of both. If the business is marital or partly marital, the court must value the marital interest. If the business is closely held, Florida law requires the court to use fair market value and to address enterprise goodwill when it exists separately from the owner spouse’s continued presence and reputation.
The business-owning spouse potentially gets to keep control of the company. The non-owner spouse possibly is still entitled to receive part of the business’s marital value. And this is why business divorces often turn on valuation evidence, records, expert testimony, goodwill, and the actual economic benefit the business provides.
In my experience, the worst business divorce settlements occur when one spouse accepts a number without understanding where it came from. A tax return or a balance sheet often does not tell the whole story.
Contact my Florida family law office to speak with an experienced Florida divorce attorney about business valuation, equitable distribution, goodwill, discovery, and closely held business interests in your Florida divorce.
Russell Knight has practiced family law for more than 19 years and has handled thousands of divorce cases involving property division, business interests, income disputes, child support, alimony, and complex financial issues. His Florida family law office helps clients address business valuation, closely held companies, professional practices, enterprise goodwill, and equitable distribution in Florida divorce cases.
Cases And Statutes Referenced in the How to Value and Divide a Business in A Florida Divorce Article
Fla. Stat. § 61.075 — Equitable Distribution of Marital Assets and Liabilities
Fla. Fam. L. R. P. 12.285 — Mandatory Disclosure
Garrison v. Garrison, 255 So. 3d 877 (Fla. 4th DCA 2018)
Turner v. Turner, 529 So. 2d 1138 (Fla. 1st DCA 1988)
Oldham v. Oldham, 683 So. 2d 579 (Fla. 4th DCA 1996)
Menendez v. Rodriguez-Menendez, 871 So. 2d 951 (Fla. 3d DCA 2004)
Manolakos v. Manolakos, 871 So. 2d 258 (Fla. 4th DCA 2004)
Palmer v. Palmer, 316 So. 3d 411 (Fla. 5th DCA 2021)
Erp v. Erp, 976 So. 2d 1234 (Fla. 2d DCA 2008)
Soria v. Soria, 237 So. 3d 454 (Fla. 2d DCA 2018)
Bair v. Bair, 214 So. 3d 750 (Fla. 2d DCA 2017)
Thompson v. Thompson, 576 So. 2d 267 (Fla. 1991)
Young v. Young, 600 So. 2d 1140 (Fla. 5th DCA 1992)
Schmidt v. Schmidt, 120 So. 3d 31 (Fla. 4th DCA 2013)
Frequently Asked Questions About Valuing and Dividing a Business in A Florida Divorce
Is a business marital property in a Florida divorce? A business definitely can be marital property but only if it was created, purchased, acquired, or grew in value during the marriage.
Does my spouse automatically get half of my business in a Florida divorce? No; a spouse can have a claim to part of the marital value of the business, yet that does not mean the spouse automatically receives ownership or control.
What if I owned the business before the marriage? The premarital portion of the business may be nonmarital. Yet, any increase in value caused by marital labor, marital funds, or marital efforts potentially is marital.
How is a closely held business valued in a Florida divorce? Florida law states that marital interests in closely held businesses must be valued using fair market value. Fla. Stat. § 61.075(6)(a)1.f.(I).
What is fair market value in a Florida business divorce? Generally, fair market value is the price a willing buyer and seller would agree to. Importantly, neither can be forced to buy or sell and both must possess reasonable knowledge of the facts.
Do Florida divorce courts use business valuation experts? Most of the time, yes. Closely held business valuation often requires expert analysis.
What records are needed to value a business in a Florida divorce? Common records could be profit and loss statements, balance sheets, bank statements, business and personal tax returns, K-1s, W-2s, 1099s, corporate records, operating agreements, etc.. The list goes on.
Can personal expenses paid through the business affect a divorce? Yes, personal expenses paid by the business may impact the business valuation and also the business owner’s income for alimony or child support.
What is enterprise goodwill in a Florida divorce? Enterprise goodwill is goodwill that belongs to the business itself and is distinct from the owner spouse’s reputation or continued presence. Florida law treats enterprise goodwill as a marital asset when it exists separately from the owner spouse. Fla. Stat. § 61.075(6)(a)1.f.(II).
What is personal goodwill in a Florida divorce? Personal goodwill is value tied to the owner spouse’s personal reputation, relationships, professional license, skills, or recurring presence.
