The United States is a country that has a great many family-run businesses that keep its economy going, so it is not anything new to be working with your family. However, sometimes, unforeseen issues come up that could hinder how you do your business.
One event that could complicate business dealings is when a couple goes through a divorce. There are many emotional concerns and logistical preparations that come with business co-owners parting ways.
It goes without saying that no family goes into business together expecting to experience a divorce down the line. Still, in entrepreneurship, it is important to adapt to unexpected changes to come out stronger.
Consider Getting a Lawyer
During a period where emotions are running high, managing the paperwork and other formalities may feel like a huge burden. There may also be conflicts that are not easy to discuss with just you and the other party. It is wise for a lawyer to step in during this time to mediate any negotiations and assist with the legal aspects of the separation.
There are occasions when gaining custody of your children also becomes a difficult discussion. Conversations can be more productive when you bring in the expertise of child custody attorneys.
Lawyers do not just perform the responsibility of representing you in court. They can also demystify the intricacies of the legal process and walk you through what challenges or issues to expect, especially since these are concerns that will affect both your family and your business.
Actions You Can Take for Your Business
There are a few different actions you can take for your business in the midst of a divorce. Carefully consider each one so that you can make a decision that is beneficial for all parties involved, including your children.
1. Buy out your ex-spouse.
A popular option to settle business disputes with your former spouse is to buy out their share of the business instead. Because your business is an asset, buying out the other’s share requires dividing the business to ensure that what the other receives is fair to both of you.
In this arrangement, you need to make sure that you have enough money or liquid assets to purchase their share. You can opt to borrow from a bank or a professional lender where you may get low interest rates.
You should also be prepared for the cost of determining the value of your business, which typically involves the expertise of an appraiser. If possible, the two parties may also determine the value independently or approach their own lawyers to assist in evaluating business value.
2. Let go of the business completely.
If you and your former spouse will both be unable to manage the business post-divorce, you can instead opt to sell the business and divide the profit as you see fit. An appraiser is again needed to determine its price before it is sold.
One thing to consider about this option is the length of time it will take before your business is sold. If it is sold immediately, then there are no issues. The money is split between the two of you, and you can do with it as you see fit.
However, if it takes longer to sell it, this means having to keep the business running for longer, too. You might have to keep working with your former spouse until someone buys the business.
3. Continue to co-own the business.
We understand that divorces are not a result of desirable circumstances, so this option is not always possible for former partners. However, if you and your ex-spouse are parting ways in amicable terms, co-owning and co-managing the business can be doable.
If both owners are willing, you could also have an arrangement in which one person remains in charge of the daily operations and business management. The other spouse can receive a certain cut of the business earnings.
This is not a widely preferred way to settle business when a couple divorces. Ex-partners usually have a hard time maintaining a civil relationship after a divorce, so you must have a formal agreement of your roles in the business to avoid issues.
Final Thoughts
Divorce is no easy experience for anyone. Thoroughly assess your situation to avoid misunderstandings and further complications with the business. Speak with your legal and financial advisors to determine the best course of action for the good of your family and your business.
