Ending a marriage is hard for both emotional and practical reasons. Property division may be especially complex if you and your spouse own a business together. The two of you may have difficulty deciding the fate of the business.
There are many steps involved. You must determine how much the company is worth and what portion of that value belongs to each of you. The most challenging part may be deciding how to move forward. Here are three common options.
Remain business partners
At first glance, this may seem impossible. However, some couples can make it work. You and your spouse are candidates for continuing your business partnership if you can:
- Set and respect firm boundaries
- Play separate roles in the business
- Leave emotions out of business dealings
- Communicate effectively
If you decide to run the business jointly, formalize your new business agreement with a contract. A formal structure, complete with an exit strategy and contingency plan, is in the best interest of you and your business.
Split the business
This option allows you and your spouse to make a clean break from each other, while still enabling the business to exist. You can achieve this by separating the company into two smaller entities with different functions. The new firms should not compete with one another. Another option is buying your spouse’s share of the business and continuing to run the company.
Dissolve the business
Perhaps the simplest option is to sell the business and split the proceeds. This can be problematic if the business does not sell in a timely manner. However, it can reduce disputes over the value of the firm, as the selling price is subject to market forces rather than more subjective measures.