The different options for dividing a business during divorce

The idea of dividing up a business during divorce can be a stressful one. Family law resources can help guide divorcing couples through these and other challenges during the divorce process, including providing help for divorcing couples who share a business.

Divorcing couples who own a family business together have several different options to consider for their family business.

Sell the business and split the proceeds

Divorcing spouses who own a business together have the option to sell the business sand split the proceeds of the sale of the business. This can sometimes delay the divorce process, however, so divorcing couples should take this possibility into account when deciding which option is best for them. Neither spouse will retain ownership of the business if they decide to sell.

One spouse buys the other spouse out

Divorcing spouses who own a business tougher have the option of one spouse buying out the other spouse’s interest in the business. If the spouses seeking to buy-out the other spouse’s interest in the family business does not have the liquidity to buy the other spouse out, it may be possible to structure a settlement to be paid over time. The buy-out is based on the appraised value of the business. This option allows one spouse to keep the business.

Both spouses continue to own the business

If both divorcing spouses want to continue with their ownership interest in the business, the divorcing couple will need to decide on the roles of each in the business following the divorce and decide if they can manage an amicable working relationship moving forward. This option allows both spouses to continue to own the business.

By understanding the different options available for handing a family business during divorce, divorcing couples can decide which option is best for them as they face the challenge of dividing a business they worked hard to build. An important first step in the process is to obtain an independent valuation of the business which will inform decisions as the couple decides which option is best for them and for their business.