Business Valuations in Florida Divorce Cases: What You Need to Know
Divorcing couples in Florida who own businesses often face complex financial disputes, particularly when determining how to value and divide the business. Whether you or your spouse own a small family business, a professional practice, or a large company, business valuation is a critical step in ensuring a fair distribution of marital assets.
Understanding Business Valuation in Divorce
Under Florida law, marital assets—including businesses acquired or developed during the marriage—are subject to equitable distribution. Business valuation is necessary to determine the fair market value of a business so that it can be divided fairly between the spouses. However, not all businesses are entirely marital property, and some may have a mix of marital and non-marital components.
Methods of Business Valuation
There are three primary approaches to valuing a business in a divorce:
- Income Approach – This method estimates the business’s value based on its income-generating potential. The most common technique under this approach is the Discounted Cash Flow (DCF) method, which projects future earnings and discounts them to present value.
- Market Approach – This approach compares the business to similar businesses that have been sold recently. It considers industry-specific data to estimate a fair market price.
- Asset Approach – This method values the business based on its tangible and intangible assets, subtracting liabilities. This approach is often used for businesses with significant physical assets.
Common Challenges in Business Valuation
- Determining Marital vs. Non-Marital Portions – If a business was started before the marriage but grew in value during the marriage, only the increase in value may be considered a marital asset.
- Goodwill Valuation – Distinguishing between personal goodwill (attributable to an individual) and enterprise goodwill (inherent in the business) can impact valuation.
- Hidden Assets or Income – One spouse may attempt to underreport income or devalue assets to lower the valuation.
- Tax Consequences – The division of a business can have significant tax implications that must be considered in settlement negotiations.
Protecting Your Business in a Divorce
If you own a business and are going through a divorce, there are steps you can take to protect your interests:
- Get a Professional Valuation – Hire a qualified forensic accountant or business valuation expert to ensure an accurate and fair assessment.
- Consider a Buyout or Offsetting Assets – One spouse may buy out the other’s share or negotiate to keep the business in exchange for other marital assets.
- Prenuptial or Postnuptial Agreements – If you have a prenuptial or postnuptial agreement addressing business ownership, it may help clarify how the business should be treated in divorce.
How Bonderud Law Can Help
At Bonderud Law Firm, we have extensive experience handling high-asset divorces and business valuations. Our team works with financial experts to ensure that business interests are properly valued and protected. If you are facing a divorce that involves business assets, contact us today for a consultation to discuss your options and legal strategies.
