Florida Business Divorce Attorneys

A business divorce is the separation of co-owners who can no longer run a company together, handled so that the company survives the split. Jimerson Birr’s business divorce attorneys represent shareholders, LLC members, and partners across Florida on both sides of the table: the owner who wants out, and the owner who wants to keep the business.

Need a business divorce attorney? Call (904) 389-0050 or schedule a consultation.

What a business divorce is, and how it differs from dissolution

Dissolution ends the company: assets are sold, creditors are paid, and whatever is left is distributed. A business divorce keeps the company alive and changes who owns it. One owner buys the other out, the company redeems an interest, the owners split the business into pieces each can run, or a court orders one of those outcomes instead of dissolving the entity.

The distinction matters because the two paths destroy very different amounts of value. A functioning company with customers, staff, and contracts is usually worth far more than its liquidated parts. Most owners who come to us saying “I want to dissolve” actually want a business divorce; they want to stop being in business with a particular person, not to stop being in business.

The four ways co-owners separate in Florida

Negotiated buyout. The owners agree on a price and terms, often with the help of the buy-sell or redemption provisions already in their shareholder agreement, operating agreement, or buy-sell agreement. This is the fastest and cheapest route, and the one the other three are designed to push the parties toward.

Buyout under the governing documents. Many agreements contain triggers and formulas: a put or call right, a shotgun clause, a valuation method, a payment schedule. When one owner invokes them and the other resists, the dispute is about enforcing the contract. A put, call, or shotgun clause is enforced as a contract claim and does not by itself displace a dissolution petition unless it is written to operate on a deadlock, in which case it can qualify as a deadlock sale provision. A deadlock sale provision is different: where the dispute is a deadlock of the kind that supports judicial dissolution, and the provision sits in a shareholder agreement that complies with Fla. Stat. § 607.0732 or in an LLC operating agreement, it applies instead of a court-ordered dissolution or buyout. For a corporation it must be initiated and carried out within the time periods that govern the buyout election under § 607.1436; for an LLC it must be initiated before the court finds that deadlock grounds exist, and then carried out under its terms. Fla. Stat. §§ 607.1430(3), 605.0702(2).

Judicial dissolution, converted into a buyout. Where no agreement controls, an owner may petition a Florida court to dissolve the company. For a privately held corporation, the grounds include a director deadlock that the shareholders cannot break and that threatens irreparable injury or keeps the business from being conducted to the advantage of the shareholders generally, shareholder deadlock over electing directors, misapplication or waste of corporate assets causing material injury to the corporation, and illegal or fraudulent conduct by those in control. Fla. Stat. § 607.1430(1)(b). For an LLC, the grounds include that it is not reasonably practicable to carry on the company’s activities in conformity with its articles and operating agreement, that assets are being misappropriated or wasted, causing injury to the company or to one or more members, or that the managers or members are deadlocked, the members cannot break the deadlock, and irreparable injury is threatened or being suffered. Fla. Stat. § 605.0702(1)(b). A dissolution petition does not have to end in dissolution, because the statute gives the company, or the other owners, a buyout election. The corporation, or if it fails to elect, one or more shareholders, may elect within 90 days to purchase all of the petitioning shareholder’s shares at fair value, and once that election is filed the case generally cannot be dropped or settled without the court’s approval. Fla. Stat. § 607.1436(1), (2). The LLC Act contains a parallel election when the petition is filed by a member. Fla. Stat. § 605.0706(1). Filing for dissolution is often the lever that produces the buyout.

Split-off or sale. Where neither owner can afford to buy the other out, the owners may divide the business, with each taking a line, a location, or a set of clients, or sell the whole company to a third party and divide the proceeds. If a dissolution proceeding is pending, the court can also appoint a custodian to run the company (or a receiver, whose job is to wind it up), or for a corporation a provisional director. Fla. Stat. §§ 607.1434(1), 605.0704.

How the price gets fought over

Price is where most business divorces are won or lost. The questions that decide it:

• What does the agreement say? A fixed formula, book value, or an appraisal process in the governing documents will usually control a contractual buyout. Owners who signed a book-value formula years ago are often surprised by what it produces today.
• What date? In a statutory buyout, the court determines the fair value of the petitioner’s shares as of the day before the date on which the petition was filed, unless the court finds another date more appropriate. Fla. Stat. § 607.1436(4). Timing the petition can move the number.
• Whose appraiser? Agreements may name a method or a neutral appraiser; absent that, each side typically retains its own expert and the court determines fair value, which need not match either expert’s number.
• What adjustments? Discounts for a minority interest or lack of marketability, add-backs for owner compensation and personal expenses run through the company, and the treatment of distributions already taken are all contested.

Our attorneys work with valuation experts from the first meeting so that the strategy for the case and the strategy for the number are the same strategy.

The first 30 days

The decisions made before anyone files anything set the terms of the business divorce.

1. Read the governing documents. The operating agreement, shareholder agreement, bylaws, and any buy-sell agreement decide most of what follows. Many owners have never read them since signing.
2. Get the records. A shareholder may inspect and copy the corporation’s basic records on at least 5 business days’ written notice; for accounting records, board minutes, and other books and records, the written demand must also be made in good faith and for a proper purpose, describe the purpose and the records with reasonable particularity, and seek records directly connected with that purpose. Fla. Stat. § 607.1602(1) to (3). A member of a member-managed LLC may inspect company records on reasonable notice; in a manager-managed LLC a member may inspect the required records but must make a written demand, describing the information and purpose with reasonable particularity, for anything beyond them, and the company must respond in writing within 10 days to a demand for information beyond the required records. Fla. Stat. § 605.0410(2), (3). Access to books and records is usually the first formal step.
3. Stop the bleeding. If a co-owner is moving money, diverting customers, or changing the locks, a temporary injunction or the appointment of a receiver can freeze the status quo while the separation is worked out.
4. Preserve everything. Email, texts, bank records, and accounting files. Both sides will need them, and destroying them is worse than anything they contain.
5. Decide on the outcome before the tactics. Buy, sell, split, or exit with a check. The right filing depends on which one you want.

Why Jimerson Birr for a business divorce

Jimerson Birr represents owners on every side of ownership separations in Florida corporations, LLCs, and partnerships, including majority owners defending against a minority owner’s claims, minority owners who are being squeezed out, and companies caught between their owners. Our attorneys draft and review the shareholder, operating, and buy-sell agreements these disputes turn on, so we know where the leverage is hidden in the documents, and we litigate the deadlock, dissolution, injunction, and receivership proceedings that force a resolution when negotiation fails. Related work includes shareholder disputes and derivative litigation, freeze-out actions, and dissolution of corporations, LLCs, and partnerships.

Frequently asked questions

Can a 50/50 partner force a buyout in Florida?

Not directly, unless the agreement gives that right. What a deadlocked 50/50 owner can do is petition for judicial dissolution on deadlock grounds, which gives the company or the other owner the statutory option to buy the petitioner’s interest at fair value rather than see the company dissolved. Fla. Stat. §§ 607.1430(1)(b), 607.1436; 605.0702(1)(b), 605.0706. If a qualifying agreement contains a deadlock sale provision and it is initiated in time, that provision controls instead.

What if there is no operating agreement or shareholder agreement?

The Florida statutes fill the gap, and they favor the owner who understands them. Without an agreement there is no contractual buyout right and no agreed valuation method, so the separation usually runs through the dissolution and buyout provisions above, with fair value set by the court if the parties cannot agree.

How long does a business divorce take?

A negotiated buyout can close in weeks. A contested statutory buyout runs on court timelines: the election to purchase is generally filed within 90 days of the dissolution petition (the court can allow more time), the parties then have 60 days to agree on price, and if they cannot, the court sets fair value. Fla. Stat. § 607.1436(2) to (4). The governing documents and the parties’ willingness to agree on a number are the biggest variables.

Can I keep running the company during the dispute?

Usually, yes, and often you should. Where one side is using control to harm the other, a court in a pending dissolution proceeding can appoint a custodian to manage the company (or a receiver to wind it up), or for a corporation a provisional director, and a court can enter an injunction where the facts support it, to protect the company while the ownership question is resolved. Fla. Stat. §§ 607.1434(1), 605.0704.

Talk to a Florida business divorce attorney

Whether you are the owner who wants out or the owner who wants to keep the company, the first conversation should happen before the first demand letter. Call Jimerson Birr at (904) 389-0050 or use the contact form to set up a consultation.