This article looks at how to keep a family business operating even after a divorce.
When business partners are also married spouses then a divorce can spell doom not just for their marriage, but for their business as well. Many couples run family businesses together and when those couples divorce it is not uncommon for the business to be valued and for that value to be split between both spouses. In many cases, splitting the value of the business can also mean the end of the business itself. However, there are ways for those who want to keep a small business running after a divorce to do so.
Buying out the other spouse
Of course, the easiest way to keep a business going after a divorce is for one spouse to simply buy out the other spouse's share in the business. As Fox Business reports, this process will require a business valuation, which can be expensive and which could eat up time that could be spent on growing the business. Additionally, it may lead to sensitive information becoming publicly available. Both spouses will also have to agree on how much the business is worth. On the upside, however, this solution could lead to the least amount of turmoil in the long-term as it will mean only one spouse will be left running the business.
Staying together as business partners
While not ideal, there are cases where the best option may be to continue on as business partners even after a divorce. This situation can happen for a number of reasons. For example, both spouses may feel personally invested in the business they helped create, while others may see it as their best opportunity at a stable income, especially if they have children to support. Other spouses may stay together as business partners temporarily if they believe that they can sell the business for a better price in the future.
The risks of staying together as business partners even after a divorce are considerable. It can be difficult to keep the emotional turmoil that has led to the breakdown of a marriage out of the workplace, for example. However, for couples who can leave personal problems at home then continuing on as business partners may be ideal. As the Wall Street Journal reports, divorced spouses who stay together as business partners need to be very clear about what their new roles are in the business. In fact, drafting a new partnership agreement that clearly delineates each partner's responsibilities could help reduce conflict and ensure the business runs smoothly.
Family law
For small business owners, a divorce is a difficult time for both emotional and financial reasons. Anybody who is going through a divorce should get in contact with an experienced family law attorney right away. A qualified attorney can advise business owners about the best way to minimize the effect of a divorce on the business and how to get through this difficult time with one's best interests firmly protected.