Millions of the more than 28 million small business in the U.S. are owned by couples. When the marriage does not work out, figuring out what to do with the family business involves careful consideration.
If you and your spouse are divorcing with a shared business, one option is to continue to own the business together. This typically works well when spouses can put their differences aside and have a good working relationship established. This option allows both spouses to hold onto their interest in the business moving forward.
Another possibility is buying out your ex’s ownership of the business. The first step would be to hire an appraiser to perform a valuation of the company and then either spouse can purchase the ex-spouse’s half if they are able to raise the funds or use other assets in exchange.
The final option is to sell the business. Following a valuation, you and your spouse can sell the business and split the proceeds. This sometimes requires continuing your business relationship while the business is on the market.
Given the significant impact a divorce can have on a business, there are a few tips couples can follow to protect their interests before and during the process:
Planning for Divorce With a Business
- When you decide to start a business with your spouse, planning ahead is key. Having a prenuptial agreement, shareholder agreement or a buy-sell agreement – contracts describing how co-owners will buy and sell their interests – can prevent a legal battle over the value of the assets if you divorce.
Hire an Experienced Divorce Lawyer
- It is important to work with an experienced and reputable divorce attorney so that negotiations stay on track. Having a lawyer who is looking out for your best interests will cut down on expensive legal fees and help you to get a favorable outcome when dividing marital assets.
Business Valuation in a Divorce
- If you are going the route of buying your spouse’s interest in the business or selling the business outright, try to agree with your spouse to hire only one business valuation firm to be able to save on expenses when possible.
Running a Family Business After Divorce
- Beyond the legal proceedings, divorce can have lasting affects on the business if one or both of you stay on running the business. Having two households, lingering legal expenses and the possible loss of a business partner may potentially change how you would run your business moving forward. Be prepared to address issues that may arise as the result of your new circumstances as you make the transition.
If you are considering a divorce and own a business, contact the Illinois Divorce Business Valuation law offices of Ronald L. Bell P.C. for answers to your questions regarding the division of marital assets with a small business, parenting time (child custody), child support, spousal maintenance or other family law matters you may have. Call today at 847-495-6000.