This article looks at what options married business owners have if they are going through a divorce.
Divorce is hard enough for most couples, but when two spouses going through a divorce are also business partners then the ordeal can be especially fraught. Divorce for business owners tends to be a particularly volatile situation. For those who run and own a business together, the financial stakes are especially high. Decisions will have to be made about what happens to the business, meaning that both parties will be making major decisions not only about their emotional and personal lives, but also about their future career goals. Here are three ways a business divorce can play out.
Buy out the other spouse
Buying out the other spouse’s interest in the business makes sense in many situations. As CBS News points out, in situations where the main functions of the business are run by one spouse, then that spouse may have a greater interest in maintaining the business and seeing it continue. For example, if one spouse is a dentist and runs a dentist practice while the other spouse takes care of administrative duties, then the spouse who is the dentist would likely have an interest in buying out the other spouse’s share in the business.
Sell the business
In other cases, however, simply selling the business and splitting the proceeds may make the most sense. This can happen if both spouses are equally engaged in the business or if neither spouse is able to buy out the other spouse. Selling the business also gives both spouses the chance to start anew if their divorce has been particularly acrimonious. In this case, it is extremely important to get a proper business valuation carried out so that the business is sold at a fair price.
Run the business together
This option is not ideal for many couples (after all, people who can’t get along in private aren’t likely to get along at work), but in some instances it does work. As the New York Times notes, simply continuing as business partners has the benefit of allowing the business to continue, thus leading to minimal disruption. It also means that there is less of a need for a business valuation. Continuing as business partners can also be a temporary measure in a down economy until the time comes when the business can be sold at a better price.
Divorce can take a financial and emotional toll no matter the circumstances. However, when a family business is involved then that toll can be especially high. For business owners who are going through a divorce, it is important to ensure that one’s assets are protected and that the decisions made today are in one’s best interests in the long term. A family law attorney can help anybody who is in the midst of a divorce, including business owners, understand how making the right decisions today could help protect them well into the future.