Divorce is almost always complicated, especially when dealing with emotions, child-related matters as well as assets and finances. If you are going through a divorce, you may consider yourself one of the lucky ones if you do not own a business with his or her soon-to-be-ex-spouse. When married couples who are business partners decide to call their marital union quits, a whole new set of Pandora’s Box-like problems surface.
Perhaps you started the business on your own and brought your spouse into the fold soon after your marriage. Or maybe you started the business together and built it into a solid and successful small company. Regardless, you dedicated years to creating your business, and now its existence is in jeopardy. What do you do? There are options, but know this: Get ready to negotiate, protect yourself and have a firm understanding of the value of your business.
Remain together, buy out the other or sell
When married business partners separate, not only does divorce affect their personal lives, but their professional lives. Will the business partnership survive? Is that even an option? Yes, it is. Here are some of the possibilities when business partners divorce:
- Remain business partners and keep the company running. This is a more realistic option for couples going through an amicable divorce. Make sure to have a shareholder agreement that includes details noting that either spouse has the right to buy out the other at a specific price.
- Purchase your former spouse’s share of the business. You must determine whether this is realistic. Can you go it alone with the business? Also, you must have sure financial footing to complete the acquisition. You may have to secure some business loans, dip into your retirement savings, contact investors or add a new business partner.
- Sell the business. This way you make a clean break, split the sale proceeds with your former spouse and get on with your life. But, as an entrepreneur, you likely have additional business ideas and can plan your next endeavor.
The break-up of a marriage does not necessarily mean the end of your business. Maybe you want to continue serving clients, or maybe you know that this is the time to depart from a business venture. Either way, make sure to protect yourself, emotionally and financially.
