Divorcing couples need to focus on numerous aspects of their finances as they navigate their way through the process. From dividing assets to determining debt responsibility, both parties will work together to find a successful resolution. When the process includes a family business, however, there can be many layers of complexity.
In general, the first step is business valuation. Based on various factors, there are numerous methods a couple can use to determine the value of their business during the divorce process. Once the business is assigned an agreed-upon value, the divorcing couple can decide on what must happen. Three common options are:
- Sell the business and split the profits. It is not uncommon for a divorcing couple to decide to identify and divide all assets and liabilities so they can start fresh on their independent financial futures. One common method of accomplishing this where a business is concerned is to simply sell the business, split the profits and move on.
- One party buys out the other. Many times, one party will have more time and energy invested into the organization. It is likely that this spouse will choose to buy out the other spouse based on the business valuation so he or she can continue to run the company independently.
- Run the business together. While this might be the rarest of the three options, the ex-spouses might decide to continue running the business together. This might not be an option for some couples, but couples can cooperate on this level and successfully co-own the organization.
Each business and every divorce is unique. It is wise to consider your options while working toward a business division with your partner. Do not hesitate to seek legal guidance as soon as possible in the process.