Your divorce may be especially challenging if your spouse is your business partner. While you two may have built and managed a successful venture together, sharing duties could be difficult going forward. Yet, the prospect of dividing your business is likely daunting, and you may fear there is no good way to do so. By understanding the most common approaches, you can choose a method that best fits your circumstances.
Continuing your partnership
Your marriage might have had serious challenges, but you and your spouse may remain effective business partners. If you two are going through an amicable divorce and have the same goals for your business, continuing as co-owners could be a viable solution. Yet, you will need to work out an agreement about how you will divide your responsibilities, lest your business partnership falters as well.
Buying out your spouse
Most business partners who divorce end their working arrangement alongside their marriage. If you want to keep your business and cannot work with your spouse, you will likely have to buy out their share. Before you do, you will need to value your business. During this process, you must account for not only its income, assets and liabilities, but for any taxes you will owe while operating it, as well as those you may face if you sell it down the road. Otherwise, you could end up overpaying for your spouse’s share.
Keep in mind that your spouse may conduct their own valuation of your business, and they may arrive at a different figure than you do. If your values differ wildly, you will likely have to litigate your dispute to determine which is more accurate.
Selling your business
You and your spouse may be unable to resolve your disagreement about your business’ value. Or, you may lack the funds to buy them out. In these cases, you two may want to sell your business and divide the profits in half. While this option may be the easiest way to cut ties, it also depends on economic conditions and the prospect of a buyer.
Dividing your business may be one of the trickiest parts of your divorce. But by considering its personal, professional and financial implications, you can find a solution for how to proceed. Consulting a business litigation attorney can help you determine what option makes sense for your circumstances.