It is not uncommon for spouses to work together or even own a business together. But being partners in business when your marriage is ending can be difficult.
When it comes to deciding who will own the business, who will work in the business, or how the business will be divided after a divorce can be complicated and often adds another layer of complication to divorce proceedings.
Sell the Business
Probably one of the easiest things to say and the hardest things to do is sell the family-owned business. If this is a possibility for your business, this is usually the fastest option for getting divorced when a business is involved. To sell the business, we recommend hiring an expert to value or appraise the business to determine the best sale price. Then it simply becomes a matter of how the profits will be divided between the spouses.
Of course, this might not be the best option for a very successful business that has a longer business life cycle. If this is the case, you should consider the other options identified below.
Continue to Work In The Business Together
This would be the other extreme from selling the business. However, if you and your ex are able to continue co-owing the business, then why change anything? Simply developing a professional, working relationship with your ex might allow you to keep your interest in the business. The other benefit of continuing to work in the business together means you will not have protracted divorce litigation or have to spend money on experts to value your business for sale or a buyout.
However, remaining in business with your ex means you likely see each other every day or at least need to deal with each other enough to ensure the success of your business. If this is not an option, you should consider selling the business or buying out your ex.
One spouse buys out the other’s half of the business
Your business will be considered an asset of the divorce. Therefore, the Court will not be swayed by emotions, such as I founded the business or I love my business. Instead, your divorce judge will consider business, and the terms of a buy-out, from a purely financial perspective.
To determine how much of a buy out is necessary, you will have to hire an expert to provide a business valuation. Once a value has been determined, one spouse can buy the other spouse’s half of the business, or other assets can be leveraged for an even exchange.
We hope you have found this article useful and we appreciate you leaving your comments below. If you or someone you know is going through a divorce and needs to sell or otherwise divide your family owned business, call us at (702) 433-2889 or fill out our on-line form for more information. We can help.