A budding entrepreneur will tell you that the beginning is the hardest part of the business. A successful entrepreneur will tell you that the hardest part is to keep the family business going after filing for divorce. Naturally, many business owners have their other half to be thankful for the company’s success. However, what happens with the family business once the chemistry is gone? Should you turn on your killer instinct and take everything? By no means. We are all grown-ups eager to survive a stressful situation painlessly as possible. Therefore, here is the ultimate survival guide for your business during the separation process.
Sign all the papers
Every property or income obtained during the marriage is considered as a community property that should be equally shared by the spouses. In case of divorce, how do both parties share the property? The best way to resolve this issue is by making a prenuptial agreement. However, most couples don’t plan their divorce that far ahead. Therefore, if a family business is initiated, it would be wise to sign a buy-sell agreement that dictates the situation if one partner leaves. With a shareholder agreement, your role in the company is protected in case of divorce.
Buy out the other half of the business
In case one spouse is eager to continue the family business, while the other no longer wants to engage in it, the best solution is to buy out the other half of the business. One spouse will get its fair share, while the other continues to run the business after the divorce. It would be wise to hire a business appraiser that will help you estimate the overall value of the company. Instead of purchasing the other half, you can also exchange other assets for it, which is a convenient solution if you don’t have enough funds to make the purchase.
Sell it and split the profit
Sometimes, selling the business is the most profitable arrangement. After getting the company’s value estimated, it is up to the spouses to agree on the price. If you are lucky, you’ll find a buyer easily and both of you will get to split the profit.
Later, you can plan a new beginning or start a new business with the profit you have gained. However, if it takes some time to find a buyer for your business, maybe it’s not the perfect time to sell it. Then, give a thought to some other options such as working together.
Remain business partners
Maybe you are not a match, but if you have built a successful company together, why not profit from being a perfect business match? Seldom do people find a perfect business partner. Running a business together after divorce doesn’t sound like the best solution, but it’s not impossible to do. Thus, you won’t lose time with a divorce settlement and you can build a new relationship with your ex-spouse as a business partner. Nowadays, many rational couples choose this solution as to avoid legal expenses and emotional discomfort.
Get a good lawyer
Unfortunately, when both parties cannot come to an agreement, consider hiring a family lawyer that will protect your interests. For example, consult family law specialists as to get a better insight into your situation and options. It is important not to get caught up in arguments and fights. The fights can lead to costly and prolonged divorce process where one side tries to financially destroy the other one. Instead, keep an amicable relationship with the ex-spouse. This helps you keep your dignity and clearly present your priorities to your lawyer without losing precious time.
Think of the children
If the spouses have children, they can choose to place their family business asset in a trust. Therefore, the child will be the only one who benefits from this situation. When a parent decides to divorce-proof the company and puts it into a trust, in the future, that asset will be protected in case of divorce. For example, if your son or daughter divorces, the business asset will rightfully belong to him or her. This solution is convenient if both parties agree on it.
Get ready for a new beginning
A happy divorce is better than a bad marriage. Sometimes, a divorce doesn’t necessarily mean the end. It can mean a new beginning for both spouses if they decide to sell or buy out the other half of the business. Working together after divorce is a bold decision made by rational people. However, if the two sides cannot reach an agreement, it is crucial to be sensible and find a lawyer who will protect your interests. You cannot predict the future, but you can, by signing a shareholder or a buy-sell agreement, secure your family business after a divorce.
About the author:
Cate is an IT girl by day and a writer by night. Her fields of expertise could be summed up to web design and digital marketing. Her interests are, on the other hand, wide and ever-evolving. These days Cate is quite passionate about helping startups and small businesses to grow.
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