A divorce can be messy and troubling at the best of times, but matters could get even more complex if the two parties were joint owners of a business. What is the best way to approach this if you find yourselves in this situation?
In an ideal world, it is better to come to an amicable arrangement rather than fighting about the best solution and potentially damaging the business interest. There are many possible solutions here, and you could simply decide to continue as-is and keep running the business and making joint decisions over everyday matters. One of you could sell their stake in the business to the other at a market rate or other mutually acceptable price. The other could then take full control of the business instead.
Up For Sale
Some people may choose to put the business up for sale so they can both exit and get on with their lives elsewhere. When the separation has been particularly emotional or traumatic, it may be better to make a completely clean break. After all, it may be difficult to carry on with the business with memories of better times fresh on the mind.
Of course, separation can descend into acrimony, and in this case, it may not be possible to reach an amicable agreement. Here, a court may decide that the business be included in the property settlement pool, which will involve careful calculation. You'll need to know how to value the organisation based on any assets or liabilities shown on the balance sheet. It may be necessary to bring in an impartial valuation expert who can then provide an independent report for the court to consider. Nevertheless, the court will also consider how much effort each party has put into running the business, which may sometimes override a straightforward financial evaluation.
Protecting the Business
It's also important to consider the business as a separate entity while trying to make the right decisions. After all, if everything does indeed descend into bad feelings and arguments, sales could be affected, employees could become disillusioned and the organisation's value could begin to plummet. In every case, you will be aiming for the best value possible, especially if the court orders that the business must be sold. As the earnings may not be stable or key staff members may have decided to depart, it'll be difficult to come up with a palatable valuation. It may even be hard to sell on the open market.
Clearly, there is much at stake here in this complicated situation. You will need to consult with a lawyer who has experience in family law matters and business sales.Share