Many couples in the U.S. are small business owners. If you and your spouse are considering divorce, figuring out what to do with the family business requires careful consideration.
If you and your spouse have a good working relationship and can put aside your differences, one option is to continue to own the business together. This allows both spouses to hold on to their respective interest in the business.
Sometimes the prospect of continuing a business relationship with an ex is not feasible. Another option for divorcing couples that share a business is to buy-out the other spouse’s interest. If this is an option you and your spouse are considering, it is important to have an experienced business appraiser conduct a business valuation of the company so that a fair market value or fair value can be determined. Either spouse can then purchase the other’s half if they are able to raise the funds or use other assets in exchange.
If neither spouse wishes to continue with the business after a divorce, they may decide to sell the business to a third party. In this case, following the valuation, you and your spouse can sell the business and split the proceeds. This often requires continuing your business relationship for a period of time while the business is on the market.
Divorce and a Family Business
Because a divorce will certainly impact a business, married couples can benefit by thinking ahead. Before starting a business, it is a good idea to consider a prenuptial agreement, shareholder agreement or a buy-sell agreement to prevent a legal battle over the value of the assets if you divorce.
Hire an Experienced Divorce Lawyer
If you are considering a divorce and have a family business, it is important to work with an experienced complex divorce lawyer to ensure that your interests are being served. A skilled negotiator can help you obtain a favorable outcome when dividing marital assets while reducing expensive legal fees.
Business Valuation in a Divorce
If you or your spouse decide to buy the other’s interest in the business or sell the business outright, your divorce attorney can help you obtain a reputable business appraiser to perform a business valuation. If possible, it is recommended that you and your spouse agree to hire only one business valuation firm to be able to save on expenses. Following a valuation, your attorney can help you interpret the valuation so that you can make an informed decision on the disposition of the business.
Running a Family Business After Divorce
Beyond the legal proceedings, divorce can have lasting effects on the business if one or both spouses decide to keep the business going. Thoughtful consideration should be given to a change in the financial situation following a divorce. If one spouse is buying the business from the other, certainly the loss of a business partner will change how you run the business. For couples who decide to continue running a business after they divorce, consider how your roles in the company may need to change to ensure your continued success.
Contact an Experienced Family Business Valuation Divorce Attorney
If you are considering a divorce and own a family business, contact an experienced Wisconsin business valuation divorce attorney for answers to your questions regarding the division of marital assets with a small business. Contact us online or call today at 414-210-3135.