Valuing a Family Business During an Orlando Divorce: Methods Courts Accept
When a marriage ends and a family business is part of the picture, dividing that asset becomes one of the most technical pieces of the case. It is rarely as simple as splitting a bank balance in half. Our Orlando divorce lawyers spend a lot of time walking clients through why a business cannot simply be assigned a number based on what one spouse believes it should be worth. Florida courts expect credible, well-supported figures before a company gets folded into a final settlement.
Why the Business Counts as Marital Property
Under Florida’s equitable distribution law, marital assets are generally divided fairly between spouses, though not necessarily equally. Florida Statute 61.075 identifies marital assets as those acquired during the marriage, and it specifically recognizes that the enhancement in value and appreciation of nonmarital assets can become marital property when marital funds or labor contributed to that growth. This means a business one spouse started years before the wedding is not automatically off the table. If the company grew because of shared effort, shared capital, or unpaid labor from a spouse who kept the books or answered phones, a portion of that growth may be divisible.
Three Approaches Experts and Courts Rely On
Financial experts typically turn to one of three recognized valuation methods.
- Asset approach. This method totals the business’s assets and subtracts its liabilities, producing a net worth figure. It tends to work best for companies with significant equipment, inventory, or real estate.
- Market approach. Here, the expert compares the business to similar companies that have recently sold, adjusting for size and industry differences.
- Income approach. This looks at projected future earnings and converts them into a present value, often the preferred method for service-based or professional practices.
Many of these principles trace back to longstanding federal guidance on business valuation, including factors laid out in IRS Revenue Ruling 59-60, which many financial professionals still reference when explaining how earnings, book value, and market comparisons should be weighed together rather than in isolation.
Active Versus Passive Growth
A key issue in many Orlando cases is whether a business increased in value because of active effort during the marriage or simply because of outside market forces. A restaurant that expanded to three locations through a spouse’s daily management decisions likely reflects active appreciation. A rental property that rose in value because of a hot real estate market may reflect passive appreciation instead. The distinction can significantly change what portion of the business ends up subject to division.
Choosing the Right Financial Expert
Because these valuations can be challenged in court, working with a credentialed forensic accountant or business valuation specialist matters. An experienced Orlando family lawyer can help identify an expert whose methodology will hold up to scrutiny and who can clearly explain the numbers to a judge.
Business valuation is rarely a one-size-fits-all process, and the right approach depends heavily on the type of company and how it grew over the course of the marriage. If you are facing this issue, do not guess at what your share should look like. Bring your questions to the family law attorneys at Donna Hung Law Group, who can connect you with the right financial professionals and build a strategy around accurate numbers rather than assumptions. Reach the office at 407-999-0099 to talk through your specific situation.
Source:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0000-0099/0061/Sections/0061.075.html
