How Divorce Can Change a Family-Owned Business

 Posted on October 17, 2019 in Business and Divorce

Marriage is an equal partnership in which spouses share their assets and responsibility towards their family. For some spouses, their relationship extends to a business partnership. It is common for spouses to help each other run a small family business, with one spouse often serving as the primary owner and manager. In less common situations, the spouses may be equal business partners who were both instrumental in creating and growing the business. If spouses in a business partnership decide to divorce, they must decide how they will continue to run the business afterward.

Your Options

Your business is a marital property that you must include as part of your division of property. You have four options for what to do with your business during the divorce:

• One of you can pay the other in exchange for complete ownership of the business.
• You can continue your existing business relationship despite your divorce.
• You can divide the business between each other and create separate businesses.
• You can sell the business and divide the proceeds.

Some of these options may be impractical for you, depending on your circumstances. You should consider continuing to be co-owners only if you believe you can put your personal differences aside in order to make business decisions. Splitting into two businesses will make each of your businesses weaker and possibly have you competing over the same clientele. Selling your business is risky if you do not have a plan for how you will replace your lost income.

Business Valuation

Regardless of what you decide to do with your family business, you should assess the value of your business before you start your divorce negotiations. Your business valuation will determine:

• How much you would have to pay your spouse in a buyout
• How much you might expect to receive if you sell it
• Whether the business is likely to increase in value

You and your spouse can each hire your own business assessor to determine its value, but it may be more cost-efficient to hire one business valuation firm and share the expense. Either way, make sure that you and your lawyer are part of the valuation process.

Contact a DuPage County Divorce Lawyer

A divorce can be trouble for a family-owned business, but the business can still survive if both sides prioritize protecting it. A Naperville, Illinois, divorce attorney at Calabrese Associates, PC, will guide you in making decisions that protect your long-term financial security. Schedule a consultation by calling 630-393-3111.

Source:

https://www.forbes.com/sites/lawrencelight/2016/03/07/when-2-business-owners-divorce-what-to-do/#6697bd3f343b