At the time you started the family business, you gave no thought to the possibility of divorce.
But now that you and your spouse are about to go your separate ways, what will happen to your business? Here are three options to consider.
If you feel your spouse might be open to the idea, you could propose a buyout. First, you will need to engage an appraiser who can perform a business valuation. Once you know the appropriate price, you can negotiate payment. If the funds are not readily available, you can suggest an exchange of assets. For example, your spouse might take the marital home and the proceeds of a retirement account in exchange for relinquishing shares of the business.
The outright sale
Another option is to put the business on the market. Once again, you will need a valuation to determine the selling price. You and your spouse will divide the profits and you can make a fresh start. Keep in mind that the business may not sell for months, and you may have to continue working together longer than anticipated.
The continuing co-ownership
If yours is an amicable divorce, you might consider continuing as co-owners. You would not need an expensive valuation and you would both retain your own interest in the company. If you believe you can continue to work together following the divorce, this might be the best option.
The way forward
There are many considerations involved and questions to answer relative to the divorce and the disposition of your company. For example, an increase in the value of the business during the span of the marriage might constitute community property. You have options, and with legal guidance, you can make the best choice in deciding the fate of your family business.