As a couple just starting your family business, divorce was probably not top of your mind. With all the hard work, complicated issues and excitement involved in the startup, anticipating how a divorce could affect your business was likely not a thought. But, with millions of family businesses, and nearly half of marriages ending in divorce it is a common complication of divorce.
In an ideal world the couple would have anticipated the possibility of a future divorce and put into a legal document exactly what they would do with the business in that case. Who would keep the business? Would one spouse buy the other out? Could you continue to amicably run the business together? These are a few of the questions that should have been addressed at the beginning of your business life. But assuming that didn’t occur and divorce is happening, here’s some ideas from professional financial advisors:
One Spouse Buys Out the Other or Sell the Business and Divide the Profits
Both of these choices require the use of a professional business appraiser to do a valuation of the company. Your business is considered an asset just like everything else that you and your spouse own together. If you are the spouse buying the other out, or if you are selling and dividing the profits, through appraisal each of you can be sure you get your fair share of the business.
Keep the Business and Run it Together
It’s obvious that this alternative only works if you and your spouse are on good terms and both feel confident that you can continue to work together after the divorce. For some ex-spouses this situation works and it definitely has its benefits, one of which is continuity of the business environment. You are the ones who know the business best, your employees will probably stick around if you both stay, and your customers will be happy that the business will operate as efficiently as always. Plus, you’ll avoid those costly appraisal fees.
Mediation Can Help
Consider mediation to help you move forward with your business decision. A professional mediator can help smooth the way through the financial and emotional issues of divorce. To learn more about how A Fair Way Mediation can help, complete our request for a free online evaluation, or to receive a free 30-minute consultation, visit us at www.afairway.com, or call 619-702-9144.
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