You have options regarding the fate of your business in divorce
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You have options regarding the fate of your business in divorce

On Behalf of | Jul 1, 2021 | Divorce |

When you and your spouse took over the family business, your marriage was in the early stages, and you never gave thought to the possibility of divorce.

However, things change in life, and you have decided to end your marriage. What will become of the business?

Put it on the market

Your first thought may be to sell the business outright. If you and your spouse agree to this option, you can split the profits and make a clean start. Keep in mind that the business may not sell right away, which means that the two of you may have to work together longer than you anticipated.

Consider a buyout

If you have more financial involvement and sweat equity in the family business than your spouse does, you might propose a buyout. If the funds are not available, you could offer a like exchange of assets.

Continue as business partners

If you believe you can continue working in partnership with your spouse once the divorce is behind you, this might be the ideal solution. You would both get to keep your shares in the business, and there would be no need for an expensive valuation.

Rely on a team approach

Many times divorcing couples disagree on the value of the family business, so a business valuation is in order. A valuation is necessary if you put the business on the market or engage in a buyout. The appraiser must define a standard of value before proceeding. At the same time, you may need the services of a CPA or forensic accountant if you suspect there are issues such as understated revenue or overstated expenses. A team approach is often desirable when it comes to determining the fate of a family business in a divorce.