Business owners sometimes get divorced, which can be complicated with a family business. Two spouses may be equal owners. Their marriage is ending, but what does that ultimately mean for their business? It’s not easy to figure out.
The truth is that there are a number of different options, some of which may work for some couples and not others. It’s very important to consider them all carefully when determining how to proceed.
1. Selling the business
First, the couple always has the option to sell their business outright. This is similar to trying to decide how to divide a family home. Assets like a business are hard to split up in any tangible fashion, but the assets can always be sold. Then, the money that is earned from the sale can be divided between the spouses. It could be that the business they built together is worth far more than it was when they started, and they could have a substantial financial gain when they sell it to a third party. That could provide both spouses with the capital they need to start over.
2. Buying 1/2 of the business
In some cases, only one spouse wants to sell the business — and the other wants to keep it and keep it operational. In order to do this, that spouse would likely have to buy the other spouse’s half of the company. They could potentially take out business loans and use those funds for the purchase. There are also some situations in which the spouse wanting to sell could accept other marital assets to offset the cost. For example, a spouse might be willing to accept some real estate or investments in exchange for their half of the family business.
3. Continuing to work together
Finally, couples should not assume that they have to change their business relationship at all. They can get divorced and continue being business partners. They don’t have to change their ownership percentages or divide any of the business assets. The big question is just whether or not the couple believes they’ll be able to work together in a professional capacity even though they have gotten divorced. While not always feasible, this sort of thing can and does happen, especially when divorces are amicable.
Considering your options
As you can see, there are usually a lot of options to keep in mind when ending a marital relationship. It’s important for those involved to carefully consider them as they look into their legal rights and the next steps that they have to take.
At The Law Firm of Poppe & Associates, PLLC, our focus is relentless advocacy for our clients. If you or someone you know is considering divorce, reach out to schedule a consultation at 646-665-3903 or by contacting us online.
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Mia Poppe, Esq.