The Pre-Wedding Checklist Item Most Business Owners Forget: Reviewing Your Buy-Sell Agreement

Cake tastings, seating charts, venue deposits. Somewhere on that list, or nowhere on it at all, should be a document sitting in a file drawer that could quietly determine whether your business survives if your marriage does not. If you own an interest in a company and a wedding date is set, your buy-sell agreement needs a look before the invitations go out.

Divorce Isn’t Automatically a Triggering Event

A buy-sell agreement, sometimes called a shareholder agreement, details what happens to an owner’s interest when specific events occur, including death, disability, retirement, or a voluntary exit. Divorce does not make that list on its own unless someone specifically wrote it in. Under Section 61.075 of the Florida Statutes, business interests grown or acquired during a marriage are frequently treated as marital property subject to equitable distribution, meaning that a spouse can end up with a legitimate claim to value tied to the business without ever becoming a co-owner. Naming divorce as a triggering event gives the company, or the remaining owners, the contractual right to buy out that value before an outside spouse gets anywhere close to an ownership seat.

Three Ways Valuation Language Falls Apart

Every buy-sell agreement needs a method for pricing an ownership interest once a triggering event occurs, and vague or stale language is where these agreements tend to collapse under pressure:

• A fixed price that gets reviewed and updated on a set schedule, instead of one written once and forgotten for a decade
• A formula tied to a defined multiple of trailing earnings or EBITDA, adjusted using objective, verifiable inputs
• A periodic independent appraisal requirement for businesses whose value fluctuates significantly
• A right of first refusal, giving the company or remaining owners the chance to buy at the agreed price before a divorce settlement forces a different outcome

Courts scrutinize these valuations more closely when the formula produces a number that looks grossly inadequate against genuine fair market value or when the agreement appears to have been drafted or quietly amended in anticipation of one specific owner’s divorce. A formula that was fair when it was written holds up far better than one that just happens to look convenient in hindsight.

The Signature Your Buy-Sell Agreement Doesn’t Have

A buy-sell agreement binds the owner who signed it. It does not automatically bind a spouse who was never a party to it, particularly regarding that spouse’s own marital interest in the value that the agreement represents. That gap is exactly why many business owners pair a buy-sell agreement with a prenuptial or postnuptial agreement, one that specifically acknowledges the buy-sell terms, waives any independent claim to an ownership seat, and confirms how the business and its appreciation will be treated if the marriage ends. Treating these two documents as connected, rather than unrelated paperwork, closes a gap that has caused real damage in more than a few Florida business divorces.

Before you say “I do,” it is worth having someone actually read what your buy-sell agreement says, or does not say, about your future spouse. Our Miami family attorneys at Hamilton O’Neill coordinate buy-sell reviews with prenuptial and postnuptial planning for business owners throughout South Florida, and there is far more room to make changes now than after the wedding date has come and gone. Contact Hamilton O’Neill to schedule a consultation.

Source:

flsenate.gov/Laws/Statutes/2023/61.075