When you started your business with your spouse, you were both probably focussed on how to make your entrepreneurial venture a success. While you may have purchased insurance and invested in software to protect your start-up, it is highly unlikely that you considered protecting your business in case of divorce.
The bad news is, that along with your marital home, your business is considered as property during a divorce. As a process that is already stressful, adding your hand-reared business into the mix can result in a long, emotion fuelled battle.
The first step is to equip yourself with a lawyer from a firm like Withers, who have a track record of assisting with divorce settlements involving businesses. In order to get the best from your lawyer, be clear about your expectations and research possible resolutions.
This is a solution that depends on how amicable you and your spouse are able to remain. If you feel that you are both able to maintain a good working relationship that will not damage your business, then co-ownership could be a possibility. But, if the mere thought or sight of your spouse sends you into a frenzy, it may not be wise.
Obviously, the real benefit of this option is that neither partner has to relinquish or sell their share. On the flip side, it does mean working with your ex…
- Buy Out
Should you decide that continuing shared ownership is not the best idea, your next option is buying out your spouse. This allows one partner to receive their share of the value, while the other can continue to operate the business. The first step in this process is securing a valuation of the company – be warned, this can be costly.
After the appraisal, one partner can choose to purchase the other’s share, either through a cash purchase or an exchange of assets, including your home, car, or other goods.
- Sell Up
This is a resolution that can be reached for a number of reasons, such as one partner not possessing the funds to buy their ex’s half, or simply because you would rather split the profit and start separate businesses. Whatever the motive, you will still need to secure a valuation of the business to gain a selling price.
If your business is purchased quickly, you will both be free to do as you please. But it can take some time to find a buyer, so you may have to continue to run the business together for a while.