Florida law recognizes assets acquired during the marriage as “marital” assets. This includes businesses that were created during the marriage and the law presumes that marital assets should be divided equally in a divorce. In other words, if you or your spouse created a business during the marriage, it is presumed that one of the parties will be awarded the business and the other will receive half of the value of the business. This general rule applies even if one of the parties did not actively participate in the business. As a result, both parties to a divorce have a lot at stake when a profitable business was created during the marriage.

To claim your entitlement to the business, you must prove the value of the business. Attorneys are not able to render the necessary expert opinions on value of a marital business. Therefore, the first step is to retain a qualified accountant who can analyze financial records and render a competent opinion on the value of the business. Not all accountants are qualified to value businesses, so it is important to identify an accountant who has the necessary qualifications. The accountant should be familiar with the preparation of valuation reports to use as evidence at trial, and be comfortable testifying about that report at trial. Like attorneys, the accountant should perform their services for one party only and preserve confidences throughout that process.

The accountant will begin by gathering needed information and documentation to analyze the business. Your attorney may need to issue subpoenas to gather needed documentation if it is not readily available. Then, the accountant will utilize one or more of three techniques to determine the value of the business:

• Income Approach: This is one of the most commonly used methods of business valuation. The business’s anticipated future earnings are analyzed as the key component under this method. The accountant will use formulas and assumptions to arrive at a present value of the business based upon historical business earnings.

• Market Approach: Here, the accountant identifies comparable businesses that provide a reasonable basis for comparison for the business involved in the divorce. In other words, by finding other comparable businesses that have recently been sold, the accountant can estimate the value of the marital business. 
• Cost Approach: Often referred to as the “asset-based approach,” this method of valuation focuses on the assets and liabilities of the business. In other words, it is presumed that a willing buyer would be willing to pay for the value of the assets in the business minus any liabilities.

Once the necessary analysis is complete, the accountant will render a report to the attorney who retained their services. Through collaboration with your attorney, any needed edits and revisions are made to the report to verify the findings concerning value.

Your attorney will be able to utilize the report for various purposes in the divorce case. First, if the report is available for mediation, it can be valuable to persuade your spouse that the value you are claiming from the business is valid.  And ultimately, if settlement is not possible, the report can be used as an exhibit at trial if a trial is needed to prove your case. Your attorney should work closely with the accountant to understand the details of the valuation report, and be prepared to present the report and testimony from the accountant at trial in the most persuasive manner possible.

We have extensive experience representing numerous business owners in Okaloosa and Walton County, and we work closely with various accountants in the area to protect those with business interests who are going through a divorce. If you need assistance to protect your interest in a marital business, please feel free to give us a call at (850) 613-6923 or click HERE.