When business owners divorce, it’s not just their personal lives that are affected. The fate of their business hangs in the balance, too. This situation brings a unique set of challenges because the company often represents not just a significant financial asset but also a source of income and a symbol of years of hard work and dedication.
Consider these possibilities for the fate of the business if the owners divorce:
Continuing joint operations
Some exes continue running the business together. This requires a solid mutual understanding and the ability to separate personal issues from business operations. It’s a good idea to have a contract to govern facets, such as financial matters and decision making.
Selling the business
Another option is to sell the business and split the proceeds. This might be the cleanest way to ensure both parties receive their fair share, but it also means saying goodbye to something they’ve built together. Selling a business can be a complex and time-consuming process.
Closing the business
Sometimes, the only viable option might be to close the business. This usually happens when running or selling the company isn’t practical or profitable. It’s a tough decision because it might mean the loss of income and jobs, including their own.
One spouse may buy out the other’s interest in the business. This common solution allows one partner to retain control and continue running the business independently. The challenge here is determining a fair buyout price, which often requires valuation experts.
Each of these options has its own set of legal and financial complexities. The impact on employees, customers and business operations must be carefully considered. The effect it has on the property division for the divorce is also an important consideration.