You co-own a Florida business, and you and your co-owners cannot agree on what your share is worth. The operating agreement or shareholder agreement sets the buyout price first. Florida statute fills the gaps, and a court or arbitrator can set fair value when owners cannot agree.
This guide explains how a fair value buyout works in Florida, in plain language. Reviewing the governing documents, the relevant statutes, the steps involved, and the records is a practical starting point in these disputes.
What Decides the Buyout Price When Co-Owners Disagree
Reviewing the governing documents early can show how a buyout price is addressed in your situation. Florida law applies wherever those documents are silent.
The governing documents are the operating agreement for an LLC, or the shareholder agreement and bylaws for a corporation. Where those documents address a buyout, they control. Where they don’t, Florida statute fills the gap.
Your entity type matters. A Florida corporation falls under the Business Corporation Act, Chapter 607. An LLC falls under the Revised LLC Act, Chapter 605. The state’s corporate structure guidance notes that owners’ rights and responsibilities depend on the entity type (Florida Division of Corporations).
For an LLC, the operating agreement governs relations among members and between members and the company. If it doesn’t address a matter, the chapter does (Fla. Stat. § 605.0105).
Shareholder agreements can also shape control. A compliant agreement can be effective among shareholders and the corporation, even where it differs from other parts of Chapter 607 (Fla. Stat. § 607.0732).
For the wider dispute picture, see the business litigation pillar page on this site.
If you and your co-owners cannot agree on a buyout price, we can review your operating agreement and financial records with you. Call (305) 570-2208 or reach out to our team. Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.
Buy-Sell and Buyout Clauses in the Operating Agreement
A buy-sell clause sets the triggers for a buyout and the method for the price. It is often the part of the agreement that decides the fight.
Common triggers include a withdrawal, a death, a divorce, or a deadlock between owners. The clause says which event starts the buyout and who may buy.
Pricing usually follows one of three methods. A formula ties the price to a set measure, such as a multiple of earnings. An appraisal clause has a valuation professional set the value. An agreed price is a number the owners write down and update on a schedule.
The wording decides which method applies and who picks the valuation professional. Read the exact words, because small differences can change the argument. Agreed prices also go stale. A number set years ago may not match what the business is worth today.
Some agreements have no buyout clause at all. Then there is no formula. The owners must negotiate, and a court may step in if they cannot agree.
A clause can be challenged, too. Florida courts look at how a deal was made and how unfair its terms are, and weigh both together (Basulto v. Hialeah Automotive).
Fair Value Under Florida Law and Statutory Appraisal Rights
Fair value is the statutory standard for what a departing owner’s interest is worth. Florida sets that standard by statute.
Appraisal rights let an owner demand payment of fair value when the company takes certain actions.
For an LLC, a member may have appraisal rights in listed events. One example is a merger where the member could vote. Another is an amendment that adversely alters that member’s voting or other rights, unless the change only reflects the voting or other rights of new interests then being authorized of a new class or series (Fla. Stat. § 605.1006).
The definition of fair value is where the fight often starts. For a corporation, fair value is measured immediately before the action the owner objects to. It uses customary and current valuation methods. It is determined without discounting for lack of marketability or minority status (Fla. Stat. § 607.1301).
The LLC rule works in a similar way. Fair value is measured immediately before the event. It excludes appreciation or depreciation tied to the anticipated transaction, unless excluding it would be inequitable to the company and remaining members (Fla. Stat. § 605.1061).
The statute sets the framework. The dollar amount comes from the business and its records.
How the Valuation Is Contested
Owners rarely fight over the formula. They fight over the inputs.
Common inputs include revenue history, add-backs (personal or one-time costs added back to earnings), owner compensation, debt, receivables, and assumptions about future earnings. Changing one input can move the result.
Records decide these inputs. Expect the review to cover tax returns, profit and loss statements, balance sheets, bank records, and the governing documents. Consistent books make each input easier to support.
The valuation date matters too. Fair value is measured at a specific point before the action, so the date and method both get argued.
Each side often hires a valuation professional. The court or arbitrator then weighs the competing testimony from those valuation witnesses. Their judgments on method and assumptions often shape the outcome.
Two common problems hurt the owner who has to prove a number. Personal expenses run through the business make add-backs hard to support. Missing or inconsistent records weaken the case for any figure.
The Typical Steps From Written Demand to Negotiation
Most buyout disputes start with a written demand. Then the parties exchange records and negotiate before anyone files in court.
Step one is the written demand. It names the trigger and the price method the owner claims. Follow the notice terms in the agreement.
Step two is the records exchange. Each side shares financial information and states its valuation position.
Step three is negotiation. Mediation may follow if the agreement requires it or a court orders it. Florida law requires a court to refer most civil damages cases to mediation when one party asks, if the costs can be paid or divided. An agreement to binding arbitration is one of the exceptions (Fla. Stat. § 44.102).
Clocks matter. In a corporate buyout, if a shareholder’s payment demand remains unsettled, the corporation must start a court proceeding within 60 days after it receives the demand. If it doesn’t, a shareholder who has made the payment demand may start the proceeding in the corporation’s name (Fla. Stat. § 607.1330).
Keep every notice and date in writing from day one.
Court or Arbitration When Owners Cannot Agree
If your agreement requires arbitration, the dispute generally goes to arbitration. If it doesn’t, the dispute usually goes to a Florida circuit court.
A written agreement to arbitrate existing or future disputes is enforceable. The exception is a ground that exists to revoke any contract (Fla. Stat. § 682.02). The court decides whether an arbitration agreement exists. The arbitrator decides certain conditions to arbitrating.
A corporate fair value proceeding is filed in circuit court in the applicable county. The court may appoint appraisers to receive evidence and recommend a value. There is no right to a jury trial in that proceeding (Fla. Stat. § 607.1330).
Florida venue rules require that actions be brought only in the county where the defendant resides, where the cause of action accrued, or where the property in litigation is located, and this rule does not apply to actions against nonresidents (Fla. Stat. § 47.011). Which county fits a given case depends on the facts.
In a dissolution proceeding, the company or other owners may elect to buy the petitioning owner’s shares at fair value instead. That election generally must be filed within 90 days after the petition, unless the court allows more time (Fla. Stat. § 607.1436).
A buyout fight can also include claims that majority owners froze out a minority owner. Those claims carry their own proof.
Not sure what your next step is?
Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.
Frequently Asked Questions About Fair Value Buyouts
Can a minority owner be forced out?
A buyout can be required when the governing documents provide for it. Whether that applies to you turns on your documents.
Do I need a written agreement for buyout rights?
Some buyout promises must be in a signed writing under Florida’s Statute of Frauds.
What records matter most in a valuation dispute?
Tax returns, profit and loss statements, balance sheets, bank records, and governing documents matter most. Consistent books support each input.
Talk Through Your Buyout Question With Our Team
If you hold the operating agreement and years of books while the other owners name a price you can’t accept, a closer review of both is the next step. We can look at your agreement, your records, and the method being used to set the number.
Call (305) 570-2208 or request a case evaluation. Case evaluations are a paid service, and fees are explained before any engagement.
Ayala Law PA focuses on business litigation, including shareholder, contract, construction and real estate disputes. Its only office is in Tampa, at 1646 W Snow Ave. The firm represents businesses in Tampa and Hillsborough County in Florida courts and arbitration.
Eduardo A. Maura is the lawyer responsible for this page. This page has not been approved by The Florida Bar. No outcome is promised, and results depend on each matter’s facts.
